Money laundering prevention: New obligations and designated parties under the law reform

This decree represents the most robust reform to the Anti-Money Laundering Law since its publication in 2018. It introduces the obligation to identify the controlling beneficiary, expands the catalogue of vulnerable activities, and grants greater auditing tools to the authorities.

Strengthening of sanctions and verification powers

The reform stipulates that the Ministry of Finance and Public Credit, the Office of the Attorney General of the Republic, the Ministry of Security and Citizen Protection, and the National Guard must implement internal collaboration programmes to monitor compliance with obligations related to money laundering prevention.

The Ministry of Finance and Public Credit and the Office of the Attorney General of the Republic are empowered to exercise verification powers and issue requests to commercial companies in order to confirm compliance with their obligations in this area.

Furthermore, administrative and criminal sanctions are toughened, the revocation of permits is authorised, and criminal liability is extended to front men or accomplices in illicit operations.

Identification of the controlling beneficiary

The concept of controlling beneficiary is incorporated into the money laundering prevention framework, having previously been introduced in tax regulation through the 2022 reform to the Federal Tax Code.

In the tax domain, taxpayers are required to identify their controlling beneficiaries and retain such information as part of their accounting records, in case it is requested by the tax authorities during the exercise of their verification powers.

However, the new reform mandates that all commercial companies must publish, via the Electronic Publication System of the Ministry of Economy, all necessary information to identify the controlling beneficiary. It is important to note that this obligation extends to all legal entities, even if they do not engage in vulnerable activities.

The concept of efective beneficiary for the purposes of the Anti-Money Laundering Law is aligned with that of the Federal Tax Code, encompassing both individuals who benefit from the acts or activities carried out by the legal entity and those who exercise effective control over it.

Expansion of Vulnerable Activities

The concept of vulnerable activities is expanded to include:

• Real estate developments: Defined as projects for the construction of buildings or subdivision of plots intended for sale or rent, as well as the receipt of funds intended for carrying out real estate developments.
• Virtual assets (cryptocurrencies): The habitual and professional offering of virtual asset exchanges by parties other than Financial Entities, conducted via electronic platforms, is considered a vulnerable activity.

Thresholds and conditions for the submission of notices have also been updated, broadening the scenarios under which vulnerable activities may be carried out.

New obligations for designated parties

• Client or user identification: The scope is expanded, requiring direct knowledge of clients or users.
• Information and record retention: The retention period for supporting documentation of vulnerable activities is extended from five to ten years.
• Training programmes: Obligations are established to implement personnel selection processes and training programmes for the administrative body, executives, compliance officer, and employees.
• Automated mechanisms: Obligations are introduced to implement automated mechanisms for continuous monitoring of transactions and identification of clients and users.
• Compliance officer: A compliance officer must be appointed for those operating through trusts or any other legal structure.
• Risk-based approach: Designated parties must conduct a risk-based assessment to identify, analyse, understand, and mitigate risks both for themselves and for their clients or users.
• Internal policy manual: Obligations are established to draft and observe an internal policy manual containing the criteria, measures, and procedures necessary to comply with money laundering prevention obligations.
• Internal and external audits: The obligation to conduct audits is introduced when there is a risk of engaging in vulnerable activities.
• Use of cash: The scenarios in which the use of cash is prohibited are expanded, and the permitted thresholds are reduced.

As can be seen, the recent reform to the Federal Law for the Prevention and Identification of Transactions with Illicitly Sourced Funds not only imposes new obligations on designated parties but also broadens the scenarios under which vulnerable activities may be carried out and even establishes obligations for all commercial companies. Additionally, it strengthens the powers and capabilities of federal authorities to audit compliance with these obligations and toughens the corresponding sanctions.