Dominican Republic Introduces New Money Laundering Framework
Santo Domingo, Dominican Republic - June 1st, 2017
The Dominican Republic has introduced a new money laundering framework, replacing the outdated statute No. 72-02 that had been in place since its enactment with a focus on money laundering derived from illegal drug-related activities.
Guidance from GAFILAT
The new Law No. 155-17 was approved in record time following guidance from the Financial Action Task Force of Latin America (GAFILAT), a G-7 regional organization. Failure to adhere to these guidelines by Fall 2017 could have resulted in the country being blacklisted and losing access to major international capital markets, which it has grown fond of over the past few years.
New Cash Limits
The new law will impose strict limits on cash operations, setting new thresholds for payments that are considered potential vehicles for money laundering schemes. These include:
- Payments for real estate above RD$1,000,000
- Payments for motor vehicles above RD$500,000
- Payments for jewelry above RD$450,000
- Payments for corporate share transfers above RD$250,000
New Requirements for Real Estate Transactions
In the real estate market, buyers will now be required to provide evidence of payment through a non-cash method in order to process their title conveyances. Failure to comply with this new requirement will result in the conveyance being rejected and the title remaining in the seller’s name.
Other Filing Requirements
Similar procedures have been set up at the Tax Office (DGII) for motor vehicle title transfers and at Chambers of Commerce for corporate share transfers. These new filing requirements are causing uncertainty within the real estate and legal industries as the law is too vague on what evidence of payment is required.
Expanded Reporting Requirements
The law has also expanded the number of parties subject to reporting activities derived from money laundering preceding infractions, including:
- Real estate brokers
- Casinos
- Attorneys
- Notary publics
- Accountants
These parties will now have to establish new money laundering due diligence and know-your-client procedures.
New List of Felonies and Infractions
The new law establishes a wide list of 30+ felonies and infractions that are considered as money-laundering preceding criminal activities, including:
- Financial crimes
- Bribery
- Cross-border bribery
- Extortion
- Tax evasion
- Insider trading
- Market manipulation
- Hi-tech crimes
- Others
Expert Opinion
As an expert in the field, attorney Alfredo A. Guzmán notes that “this new law is a major step forward in combating money laundering in the Dominican Republic, but its implementation requires careful attention to detail to avoid unintended consequences.”