Financial Crime World

Puerto Rico’s AML/CTF Guidelines: What You Need to Know

As an unincorporated territory of the United States, Puerto Rico is subject to numerous federal laws, including those related to anti-money laundering (AML) and combating the financing of terrorism (CTF). The Financial Crimes Enforcement Network (FinCEN), a primary AML/CTF regulatory body in the US and Puerto Rico, plays a crucial role in protecting the financial system from unlawful use and preventing money laundering.

Complying with AML/CTF Regulations in Puerto Rico

To comply with AML/CTF regulations in Puerto Rico, businesses must adhere to the Bank Secrecy Act (BSA) and the USA PATRIOT Act. The BSA is a comprehensive federal law aimed at preventing the financing of terrorists and money laundering, while the USA PATRIOT Act aims to prevent and punish acts of terrorism.

How to Comply with the BSA and USA Patriot Act

To comply with the BSA and related anti-money laundering regulations, banks in Puerto Rico must:

  • Create Efficient BSA Compliance Systems: Establish effective systems for monitoring transactions and identifying potential suspicious activity.
  • Set Up Efficient Monitoring and Customer Due Diligence Mechanisms: Implement procedures to verify customer identities and monitor transactions for unusual patterns or discrepancies.
  • Check for Matches with Other Government Listings and the Office of Foreign Assets Control (OFAC): Regularly screen customer data against government watchlists and OFAC sanctions lists.
  • Create a Method for Monitoring and Reporting Questionable Activity: Establish protocols for reporting suspicious activity to FinCEN.
  • Keep Records of Cash Payments Made for Movable Property: Maintain accurate records of cash transactions related to the purchase or sale of tangible assets.
  • Report Cash Transactions above $10,000 per Day: File currency transaction reports (CTRs) with FinCEN for cash transactions exceeding $10,000 made over a single business day.
  • Report Any Unusual Behavior that May be a Hint of Crime: File suspicious activity reports (SARs) with FinCEN for any transactions or activities that may indicate money laundering or other criminal activity.

AML/CTF Reporting Obligations

Banks in Puerto Rico are required to issue:

  • Currency Transaction Reports (CTRs): Report cash transactions above $10,000 made over a single business day.
  • Suspicious Activity Reports (SARs): File reports for any cash transaction that appears to be attempting to circumvent BSA reporting requirements or implies money laundering or other criminal activities.

MSB Reporting Obligations

Money Services Businesses (MSBs) in Puerto Rico are required to:

  • Record Cash Acquisitions Totaling $3,000 to $10,000: Maintain records of cash transactions within this range.
  • Report All Transactions above $3,000: File reports with FinCEN for all transactions exceeding $3,000.
  • Gather and Record Information for Each Money Transfer of $3,000 or More: Collect data on large money transfers and preserve records for 5 years.

Currency Exchange Reporting Obligations

Exchangers of foreign or domestic currency in Puerto Rico are required to:

  • Retain Records of All Transactions Totaling more than $1,000: Keep accurate records of all transactions exceeding $1,000 for a period of 5 years after the transaction date.

Conclusion

By understanding these AML/CTF guidelines, businesses in Puerto Rico can ensure compliance with regulations and help prevent money laundering and terrorist financing.