Financial Crime World

Portugal’s Fight Against Financial Crimes: Effective Strategies for Prevention

As one of Europe’s top destinations for financial services, Portugal has long been aware of its vulnerability to money laundering and other financial crimes. To combat these threats, the Portuguese government has implemented a robust anti-money laundering (AML) framework that is in line with global standards.

Portugal’s AML Framework

Since joining the Financial Action Task Force (FATF) in 1991, Portugal has continuously strengthened its AML regulations and compliance policies. The country’s Financial Intelligence Unit (FIU), established in 2002, plays a crucial role in detecting and preventing financial crimes.

Key Components of Portugal’s AML Framework

  • Financial Intelligence Unit (FIU): Operates independently under the Portuguese Judicial Police, focusing on executive matters rather than financial regulation.
  • AML Regulations: Set out specific requirements for AML compliance, aligning with FATF’s and the European Union’s regulations.
  • Banco de Portugal: Responsible for implementing AML/CFT measures in Portugal, regulates and publishes guidelines for financial institutions.

Portugal’s Progress in Combating Financial Crimes

In 2004, Portugal enacted Law No. 11/2004, which set out specific requirements for AML compliance. Following a comprehensive evaluation by FATF in 2017, Portugal was deemed compliant with 12 of the 40 FATF Recommendations and largely compliant with 22 others. This achievement removed Portugal from FATF’s list of AML-deficient countries.

Recent Developments

Since 2017, Portugal has taken significant steps to enhance its AML legislation. New laws introduced:

  • Lower cash transaction limits
  • Established a national record of recipients for financial transactions
  • Obliged attorneys to report suspected money laundering activities

Benefits of Portugal’s AML Efforts

  • Removed from FATF’s list of AML-deficient countries
  • Classified as a Jurisdiction of Primary Interest by the US Department of State in 2018 International Narcotics Control Strategy Report (INCSR)
  • Strong AML laws and enforcement mechanisms designed to prevent organized crime from exploiting financial systems

Implementing Effective AML Compliance Strategies

To combat financial crimes, Portugal has implemented regulations that cover various sectors, including:

Key Requirements for AML Compliance in Portugal

  • Identify clients and conduct due diligence on business relationships or transactions exceeding specific thresholds
  • Report suspicious transactions to both the Central Department of Criminal Investigation and Prosecution and the FIU
  • Prohibit maintaining correspondence relationships with shell banks or institutions facilitating shell bank accounts

Consequences of Non-Compliance

In cases of non-compliance, Portugal imposes penalties that can include:

  • Imprisonment for up to 12 years
  • Fines equivalent to a prison sentence, taking into account the legal entity’s financial situation and employee-related expenses

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