Regulations applicable to the Registry of Companies for the prevention money laundering and terrorism financing

By means of Resolution No 237/2009, published in the Official Gazette on September 16, 2009 (“Resolution 237”), for the first time, the Financial Information Unit implemented the obligations of the Registry of Companies of the City of Buenos Aires and the Registries of Commerce of the Provinces, as entities obliged under Article 20 of Law No 25,246 (the “Obliged Entities”) and approved the corresponding Guide and the Suspicious Transactions Report.

Resolution 237 states that it shall consider as clients, every individual or corporation, national or foreign, on behalf of whom somebody acts before the Obliged Entities. It also provides the general identification requirements applicable to individuals and legal entities.

(ii) foreign companies that have their headquarters or their main activities in Argentina,

(iii) the incorporation of vehicle companies as legal instruments for the investment in Argentina, with respect to the controlling entity,

(iv) companies in which the controlling entities are financial trusts or mutual funds.

Resolution 237 also provides that reinforced measures for identification shall be implemented as well when it comes to companies that have a stock capital in relation to their corporate purpose. Furthermore, where immediate or successive transfers of companies’ holdings take place over short periods of time, Resolution 237 establishes that the Obliged Entities shall adopt the necessary proceedings to allow them to identify the oversight and direction bodies of the companies and their controlling owners, partners and shareholders.

When the capital subscription of at least one of the partners in the constitution of a local corporation exceeds AR$ 100,000, the subscription of a capital increase exceeds that same sum or the assignment of capital to a branch of a foreign company exceeds the sum of AR$ 200,000, the Obliged Entities must request from companies a sworn statement about the legality and the source of the funds.

Moreover, Resolution 237 provides that in the case of companies included in  article 299 of  Argentine Companies Law No 19,550 (such as publicly-held companies and companies with more than AR$ 10,000,000 of capital) and branches of foreign companies obliged to submit financial statements, the Obliged Entities must pay attention to certain aspects concerning

(i) production and/or trading of goods and/or service agreements (volumes, publicity, distribution, etc.);

(ii) specific situation of the company at the beginning of the financial year;

(iii) principal measures implemented during the financial year that have entailed a modification in the company’s policies;

(iv) permanent contractual and non-contractual agreements with other companies that have determined the company’s activities, pointing out their main aspects and factual circumstances; and

(v) solvency, indebtedness, property, and profitability ratios, and every other aspect deemed relevant.

Resolution 237 sets forth the minimum requirements that shall be taken into account at the moment of reporting suspicious transactions and provides the guidelines for the procedures to be adopted by the Obliged Entities in order to identify them.

Regulation 237 also states that the Obliged Entities shall report as a suspicious transaction the client’s denial to submit the information requested, or its intention to misinform or to provide with misleading information or of difficult verification, as well as every other fact lacking legal or economic justification. Additionally, it shall be deemed necessary to make the corresponding report when inconsistencies or contradictions appear between the proceedings carried out and the client. Resolution 237 also establishes that not only suspicious transactions effectively performed must be reported, but also those that are merely attempted.

Finally, in the event of money laundering activities, after identifying facts and transactions that the Obliged Entities deem relevant, the Suspicious Transactions Report shall be made and submitted to the Financial Information Unit, together with the other documentation necessary for a further analysis.