Financial Crime World

Puerto Rico’s Financial Landscape: Understanding the Types of Financial Crimes

As Puerto Rico continues to navigate its financial crisis, it is essential for residents and businesses to be aware of the various types of financial crimes that can have devastating consequences. These crimes not only result in financial losses but also erode public trust and undermine economic stability.

The Importance of Beneficial Ownership Information (BOI) Reporting

The Corporate Transparency Act has introduced a requirement for beneficial ownership information (BOI) reporting, which mandates that certain entities disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). In Puerto Rico, this means that entities registered with the Department of State must file a BOI report, unless an exception applies.

What is a Beneficial Owner?

According to FinCEN, a beneficial owner is an individual who exercises substantial control over an entity or owns at least 25% of its ownership interests. This can include individuals who own or control companies, trusts, and other legal entities.

Types of Financial Crimes

Several types of financial crimes have been on the rise in Puerto Rico:

  • Embezzlement: occurs when a person, often in a position of trust, misappropriates funds or assets for personal gain. This can involve stealing money from a company’s accounts or using company credit cards for personal expenses.
  • Money Laundering: involves concealing the source of illegally obtained funds by funneling them through legitimate businesses or financial institutions. This can include using shell companies or other structures to disguise the true nature of transactions.
  • Tax Evasion: occurs when individuals or businesses fail to report their income or claim false deductions on their tax returns. This results in lost revenue for the government and creates an uneven playing field.

Combating Financial Crimes

To combat these types of financial crimes, Puerto Rico has implemented various measures:

  • Increasing transparency requirements for businesses
  • Implementing stricter penalties for those who engage in illegal activities
  • Improving law enforcement agencies’ ability to detect and prosecute financial crimes

Protecting Yourself from Financial Crimes

For individuals and businesses operating in Puerto Rico, it is essential to be aware of these types of financial crimes and take steps to protect themselves:

  • Implement internal controls
  • Report suspicious activity
  • Seek the advice of a financial professional or attorney

Conclusion

Financial crimes are a serious concern in Puerto Rico and require a comprehensive approach to combat them. By understanding the different types of financial crimes and taking steps to prevent them, we can work towards creating a more transparent and stable financial system for all.