Amendments in the regulations regarding the prevention of money laundering and financing of terrorism – Communication “A” 4835 of the Central Bank. [1]

Through Communication “A” 4835 (“Com. 4835”) dated as of August 15, 2008 the Argentine Central Bank (“CBA”) enacted several amendments with respect to the “Anti Money Laundering and Other Illegal Activities” (“AML Rules”); “Anti Financing of Terrorism” (“AFT Rules”); and “Consolidated Supervision” regulations.

Within the amendments introduced by Com. 4835, we remark the following:

1.    Incorporates under section 1.1.6 of Section 1 of the AML Rules additional requirements that financial entities, since January 1, 2009, shall conduct for the duly identification of depositors that are not holders of the bank accounts when cash deposits are made (Section 1; Com. 4835).

2.    Replaces section 1.3.4.3. of Section 1 of the AML Rules, providing with a detailed description of the individuals who shall be considered as “Personas Politicamente Expuestas” or “Politically Exposed Individuals” (“PEPs”) since January 1, 2009 (Section 2; Com. 4835). In addition, it incorporates an exhibit of the sworn statement for the duly identification of PEPs since the same date (Section 3; Com. 4835).

Note that such sworn statement could be replaced with any other documentation as long as it fully demonstrates the appropriate identification of the client and it is left on record its inclusion or exclusion as PEPs.

3.    Determines through section 5.2.3. of Section 5 of the “Consolidated Supervision” that AML Rules and AFT Rules shall also be followed, since January 1, 2009, by branches of local entities under the scope of such regulations as long as the foreign applicable regulations where such branches are incorporated permits it (Section 4; Com. 4835).

In addition, financial entities shall also assure that its branches consider within its internal control, and with respect to the AML and AFT Rules, the following:

a.     Existence of written procedures for the prevention of such crimes, which shall be adequate with regards to the international standards as well as the headquarters’ standards;

b.     Appointment of an individual who shall be responsible for the implementation of the abovementioned procedures;

c.     Existence of and organizational structure that clearly defines the roles and responsibilities of each individual;

d.     Existence of written procedures for the reporting of unusual or suspicious activities;

e.     If it has an internal auditing system on these respects; and

f.      If there are management courses oriented towards the AML and AFT prevention.

4.    Representatives of financial entities not authorized to operate in the country (“Representatives”) must submit before the CBA a certificate extended by the supervision authorities of the country where the financial entity was originally incorporated. Such certificate shall express that the entity duly complies, within other requirements, with the standards and regulations regarding the Prevention against Money Laundering and Financing of Terrorism and that the Representative is authorized to operate in Argentina (Section 5; Com. 4835).

Under the provisions of Com. 4835, the certificate shall be submitted by Representatives that: (i) wishes to be registered before the CBA and; (ii) were, prior to Com. 4835, registered before the CBA being obliged to submit it before January 1, 2009 (Section 9; Com. 4835).

5.    Representatives shall, as from the enactment of Com. 4835, duly follow the provisions related to sections 1.1 through 1.4; 1.5 and 1.6 and section 1.8 of AML Rules with respect to the transactions were such Representatives are involved (Section 6; Com. 4835).

6.    Representatives shall, as from the enactment of Com. 4835, duly follow the provisions related to sections 1 through 4 of AFT Rules with respect to the transactions where Representatives are involved (Section 7; Com. 4835).

7.    Determines that financial entities shall have managed, before January 1, 2010, to employ necessary procedures that allows to its clients the duly recognition of the regulations referred under Section 2 of Com. 4835. In addition, financial entities shall pursue its best efforts for the duly identification of PEPs (Section 8 Com. 4835).

As a conclusion, we can see that the CBA continues to strictly regulate the conducts that should be adopted by entities under the scope of the Prevention against Money Laundering and Financing of Terrorism regulations.