Financial Crime World

Portugal Takes Steps to Prevent Money Laundering Amid Organized Crime Risks

Introduction

Portugal, despite its geographical location posing risks, has been actively working to prevent money laundering by implementing effective Anti-Money Laundering (AML) compliance policies. The country’s government recognizes the importance of stopping financial resources for crime organizations and continues to take precautions.

History of AML Regulations in Portugal

  • Establishment of the Financial Intelligence Unit (FIU): In 2002, the FIU was established as an independent unit under the Portuguese Judicial Police, dealing with executive matters and not regulating financial affairs.
  • First concrete legislation against money laundering: The first concrete legislation against money laundering in Portugal was enacted in 2004 through Law No. 11/2004, drawing out specific requirements to follow up with FATF’s and the European Union’s (EU) AML compliance regulations.

Compliance with International Standards

  • Financial Action Task Force (FATF): Since joining the FATF in 1991, Portugal has made improvements to its AML regulations over the years. In FATF’s 2017 evaluation, Portugal was cited as compliant with 12 and largely compliant with 22 of the 40 FATF Recommendations.
  • Banco de Portugal: Banco de Portugal acts as the central bank and financial regulator of Portugal, responsible for taking AML/CTF measures in the country.

Enhanced AML Legislation

In 2017, Portugal enhanced its AML legislation to reduce allowable limits for cash transactions, establish a national record of recipients for financial transactions, and obligate attorneys to report suspected instances of money laundering to authorities.

Regulations for AML

Portugal has put in place regulations for AML that encompass a wide range of sectors, including:

  • Financial institutions: Entities are mandated to identify clients and conduct due diligence for business relationships or transactions exceeding specific thresholds. For high-risk situations, an elevated level of due diligence is necessary.
  • Non-financial businesses: Entities are obligated to formulate compliance programs and maintain correspondence relationships with shell banks or institutions facilitating shell bank accounts is prohibited.

Penalties for Non-Compliance

In Portugal, imprisonment can range from 12 years, although it’s always restricted to the most severe penalty that applies to the underlying offenses. For legal entities, the prison sentence is converted into a fine, with a 10-day fine corresponding to a month of imprisonment.

Conclusion

Portugal has made significant efforts to prevent money laundering and combat organized crime. By implementing effective AML compliance policies and regulations, the country aims to create a secure environment for businesses and individuals.