Amendments to Measures and Procedures to Be Followed in the Insurance Industry to Prevent Money Laundering and Financing of Terrorism

Within the framework of Law No 25,246, the Financial Information Unit (“FIU”) has enacted a variety of resolutions that rule the way in which the Obliged Entities shall implement the know your client policy and report suspicious operations under section 20 of Law 25,246.

The Resolution repeals Resolution No. 4/2002 of the FIU and establishes new guidelines regarding the measures and procedure that insurance companies, brokers, agents, intermediaries, experts and adjusters (the “Obliged Parties”) must follow to prevent, detect and report facts, acts, operations and omissions that may derive from money laundering and financing of terrorism.

Among other measures the Resolution establishes that the Obliged Parties must prepare a “Manual for the Prevention of Money Laundering and Financing of Terrorism” and the minimum subjects it must provide for which should include among other issues the obligation to provide for penalties for the staff of the Obliged Parties who do not comply with the manual. The Resolution also enlarges the obligations and powers of the Compliance Officer of the Obliged Parties.

The Resolution also establishes policies for the identification and knowledge of the Obliged Parties’ clients. It includes the obligation of having a “Client’s Identification File”. This file must be updated annually, being the Obliged Parties under the obligation to collect certain information established in the Resolution. When certain transactions connected to life insurance amount to AR$ 40,000 or more, and in non-life insurance to AR$ 50,000 or more, the Obliged Parties shall request some extra information from their clients.

As a first measure the Obliged Parties must have prepared files for their existing clients by May 14, 2011.

The Resolution also introduces a special procedure regarding the identification of clients at the moment of paying a loss or indemnification, when the payee is other than the insured or policy holder. Among others, payees must show their ID to collect the payment.

The Resolution makes a significant change with regard to information duties of the Argentine Superintendent of Insurance to the UFI by establishing a monthly digital report.

The Resolution increases from 5 to 10 years the period for which the Obliged Parties shall keep i) documentation regarding their clients and any complementary information on their identify; ii) original documents or notarized copies of transactions or operations; iii) record of the operations considered suspicious; and iv) digital back ups, in order to use them as evidence in any investigation of money laundering and financing of terrorism.

Violations to of any of the obligations established in the Resolution shall be penalized with fines. Their amount shall depend on the severity of the fault incurred by the Obliged Parties.