Puerto Rico Tries to Strike Balance Between Anti-Money Laundering Efforts and Individual Privacy

Striking a Balance in San Juan

San Juan, Puerto Rico - In an effort to prevent money laundering and terrorist financing, the Commissioner in Puerto Rico has been granted the authority to impose civil penalties of up to $10,000 per violation for non-compliance with anti-money laundering (AML) and know your customer (KYC) regulations.

The Need for Balance

However, amidst these efforts to combat financial crimes, concerns have been raised about the impact on individual privacy. To address this issue, Puerto Rico has implemented measures to strike a balance between AML/KYC regulations and privacy considerations for individuals.

Consequences of Non-Compliance

Under Puerto Rican law, individuals or entities found guilty of money laundering or terrorist financing may face imprisonment for up to 15 years and/or a fine of up to $100,000. The Financial Institutions Commissioner also has the power to revoke or suspend the licenses of financial institutions found in violation of AML/KYC regulations.

Measures to Ensure Compliance

In addition, the Commissioner can issue orders requiring institutions to take corrective action, intervene to take control of operations, or subject them to enhanced supervision if they are repeatedly non-compliant. Experts warn that failure to comply with AML/KYC regulations can damage an institution’s reputation, leading to loss of customers and business opportunities.

Impact on Specific Professions

Real estate agents and brokers in Puerto Rico are required to comply with the Bank Secrecy Act (BSA) and its related regulations, as well as the Anti-Money Laundering Rules and Regulations of the Financial Industry Regulatory Authority (FINRA). Legal professionals, such as lawyers and law firms, are also subject to BSA regulations.

Balancing AML/KYC with Privacy

To balance AML/KYC regulations with privacy considerations, Puerto Rico has implemented a risk-based approach, which requires financial institutions to conduct due diligence on customers based on their level of risk. The country has also established data protection laws and ethical obligations for financial institutions to protect personal information.

Technological Innovations

Technological innovations such as blockchain and artificial intelligence (AI) are being explored to enhance AML/KYC compliance in Puerto Rico. These technologies can provide a secure and reliable method for verifying customer identities, reducing the need for manual verification processes and minimizing the risk of human error.

Conclusion

In conclusion, while AML/KYC regulations aim to prevent financial crimes, it is essential to strike a balance between these efforts and individual privacy considerations. By implementing measures such as data protection laws, risk-based approaches, and technological innovations, Puerto Rico can effectively combat money laundering and terrorist financing while protecting the personal information of its citizens.