Administrative Fines Loom for Companies Defying Anti-Money Laundering and Anti-Terrorism Regulations

In a move to curb financial crimes, Argentina has introduced strict regulations that impose administrative fines on companies found in breach of risk and compliance management obligations. These regulations set forth by the Argentine Central Bank, the Securities Commission, and the Financial Information Unit aim to prevent money laundering and financing terrorism.

Criminal Liability Unclear

While companies do not face criminal liability for risk and compliance management deficiencies, legal entities can still suffer indirect consequences. Deficient risk and compliance management carried out in connection with an integrity programme can lead to:

• Loss of access to benefits such as ’exception from penalties’ and ‘reduction in penalties’
• Indirect breaches of administrative, civil, criminal, and other regulations

Governing Bodies and Senior Management at Risk

Members of governing bodies and senior management can face civil liability for breach of risk and compliance management obligations. This includes:

• Failure to establish proper risk and compliance management
• Breach of administrative, civil, criminal, and other regulations

Administrative Sanctions

Members of governing bodies and senior management may face administrative sanctions for breach of risk and compliance management obligations if those obligations are established in regulations issued by relevant administrative agencies. The Argentine Central Bank, the Securities Commission, and the Financial Information Unit have the power to impose:

• Fines
• Suspensions
• Disqualifications on financial entities, listed companies, or foreign exchange agencies found in breach

Corporate Compliance Defence

There is no corporate compliance defence under current regulations, but companies may be able to reduce penalties by:

• Establishing a proper control and supervision system
• Reporting crimes internally
• Returning undue benefits obtained through criminal activities

The anti-money laundering and anti-financing terrorism regulations establish factors that can reduce penalties, including compliance with internal rules and procedures.

Recent Cases

As laws and regulations are recently enacted, there are no leading cases regarding their enforcement. However, authorities have begun to impose sanctions on individuals or entities found in breach of risk and compliance management obligations.

Government Obligations

While government agencies and state-owned enterprises are not subject to special risk management obligations, they do have anti-corruption compliance management requirements under Decree 41/1999. This includes:

• Submitting sworn statements of their heritage and financial situation
• Reporting conflicts of interest
• Refraining from accepting gifts or benefits that may influence their decision-making

Conclusion

In conclusion, companies in Argentina must take heed of the new regulations and ensure they have robust risk and compliance management systems in place to avoid administrative fines and potential criminal liability. Failure to comply can result in severe penalties, damage to reputation, and even criminal charges for individuals involved.