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Spain Enacts Regulations to Prevent Money Laundering and Terrorist Financing

Madrid, Spain - The Spanish government has enacted regulations to prevent money laundering and terrorist financing in the country. In a bid to ensure compliance with relevant provisions, institutions are required to implement policies and procedures for due diligence, reporting, record keeping, internal control, risk assessment and management.

Institutions Subject to AML Rules

According to Article 2 of Law 10/2010, institutions subject to Anti-Money Laundering (AML) rules include:

  • Credit institutions
  • Insurance entities and insurance brokers
  • Investment firms
  • Management companies of collective investment institutions
  • Institutions for occupational retirement provisions
  • Mutual guarantee companies
  • Electronic money institutions
  • Persons professionally engaged in currency exchange activities
  • Postal services with respect to the activities of money order or transfer
  • Property developers and real estate agents
  • Auditors, chartered accountants, tax advisers and lawyers
  • Digital assets service providers

Digital Assets Subject to AML Rules

Law 10/2010 defines digital assets as:

“Any digital representation of value not issued by a central bank or public authority, which is not necessarily associated with an established legal tender and does not possess the legal status of currency or money but is accepted as medium of exchange and can be transferred, stored or electronically negotiated.”

AML Compliance Requirements

Institutions subject to AML rules are required to implement three categories of compliance requirements:

  1. Due Diligence: Institutions must conduct due diligence on customers, transactions and services, including:
    • Identification of the contracting party
    • Clarification of whether the contracting party is acting on behalf of a beneficial owner
    • Obtaining and evaluation of information with that purpose
  2. Information Obligations: Institutions must examine any transaction that could be related to money laundering, inform the SEPBLAC about those transactions in which there are indications of money laundering, not perform those transactions, communicate periodically and collaborate with the SEPBLAC.
  3. Internal Control Requirements: Institutions must create appropriate business and customer-related internal safeguards to manage and mitigate the risks of money laundering and terrorist financing.

Digital Assets Service Providers

Electronic money institutions and providers of exchange services for virtual currency for fiat currency and custody of electronic purses are included as obligated entities in 2011 and 2021 respectively. Institutions must implement policies and procedures for due diligence, reporting, record keeping, internal control, risk assessment and management to prevent money laundering and terrorist financing.

Conclusion

The Spanish government has taken a significant step in preventing money laundering and terrorist financing by enacting regulations requiring institutions to implement policies and procedures for due diligence, reporting, record keeping, internal control, risk assessment and management. Institutions must ensure compliance with these regulations to prevent financial crimes and maintain the integrity of the financial system.

Sources

  • Law 10/2010 on Prevention of Money Laundering and Monetary Offences
  • Royal Decree 304/2014 on Prevention of Money Laundering and Monetary Offences
  • SEPBLAC (Spanish Commission for the Prevention of Money Laundering and Monetary Offences)