Financial Crime World

Puerto Rico’s Financial Institutions Targeted in Crackdown on Crime

The Financial Crimes Enforcement Network (FinCEN), the leading anti-money laundering (AML) and counter-terrorism financing regulatory body in the United States and Puerto Rico, is intensifying efforts to shield the island’s financial system from illegal activities.

Regulatory Framework

As an unincorporated US territory, Puerto Rico is subject to a wide range of federal laws, including crucial AML regulations. FinCEN plays a pivotal role in protecting Puerto Rico’s financial system by:

  • Overseeing AML activities
  • Collecting and analyzing financial data
  • Disseminating vital intelligence
  • Employing financial and law enforcement tools to safeguard the system from illicit use

AML Regulations

To combat money laundering and terrorist financing, financial institutions in Puerto Rico must adhere to two primary AML regulations:

Bank Secrecy Act (BSA)

The BSA requires banks and financial institutions to:

  • Develop robust customer due diligence procedures
  • Implement screening mechanisms
  • Maintain record-keeping requirements

These measures have proven invaluable in criminal, tax, and regulatory investigations and prosecutions.

USA PATRIOT Act

The USA PATRIOT Act aims to prevent and penalize terrorism-related offenses while strengthening law enforcement’s investigative capabilities. Key provisions include:

  • Extended surveillance against terrorism-related offenses
  • Increased monitoring of highly skilled terrorists
  • Access to corporate records in national security or terrorism cases
  • Information-sharing among federal organizations

Compliance Requirements

To ensure compliance with AML regulations, financial institutions must:

  • Establish comprehensive BSA systems
    • Internal controls
    • Independent testing
    • Designating a Compliance Officer
    • Providing employee training
    • Setting up effective monitoring and customer due diligence mechanisms
  • Implement risk-based AML programs
  • Develop customer identification programs
  • Maintain records of cash transactions exceeding $10,000
  • File Currency Transaction Reports (CTRs) electronically to FinCEN within 15 days of the transaction date

Additional Requirements for Money Services Businesses

Money services businesses (MSBs) must:

  • Keep records of cash acquisitions amounting to $3,000-$10,000
  • Record information for each money transfer above $3,000
  • File reports electronically to FinCEN within 15 days of the transaction date

Conclusion

With FinCEN’s stringent regulations and dedication to uncovering financial crimes, Puerto Rico can rely on a robust AML framework to safeguard its financial system.