Financial Crime World

Dominican Republic’s Crusade Against Money Laundering and Terrorism Financing: An Inside Look at the AML/CFT Regulatory Framework

The Caribbean island nation of Dominican Republic is taking bold steps to combat financial crimes, specifically money laundering (ML) and terrorism financing (TF). The government’s commitment to eradicating these illicit activities is evident through the establishment of the Committee against Money Laundering and Terrorism Financing (CMLOC). Let’s delve deeper into the Dominican Republic’s regulatory framework against ML and TF.

The Establishment of CMLOC

The CMLOC serves as the dominant body overseeing prevention, detection, control, and combating of ML and TF in the Dominican Republic. The membership of this collegial body includes:

  • Public Ministry
  • Financial Analysis Unit (UAF)
  • National Directorate for Drug Control
  • Monetary Board
  • General Directorate of Internal Taxes
  • General Directorate of Customs
  • Directorate of Casinos and Gaming
  • Cooperative Development and Credit Institute
  • Various Superintendents (Insurance, Banks, Securities, Pension Fund, and Private Security)
  • Any authority with regulatory or supervisory power or activities or economic sectors subject to AML/CFT law.

Role of the Financial Analysis Unit

One pivotal entity in this structure is the UAF, an autonomous unit under the Ministry of Finance. The UAF’s primary function is to analyze, identify, and submit financial analysis reports to the Public Ministry for potential ML and TF infractions or financing of terrorism.

AML/CFT Compliance Programs for Financial and Non-financial Entities

Regulations require financial and non-financial regulated entities in the Dominican Republic to maintain stringent anti-money laundering and counter-terrorism financing (AML/CFT) compliance programs. These entities must ensure measures are in place to manage and mitigate ML and TF risks. Key aspects of an effective AML/CFT compliance program include:

  • Client due diligence
  • Risk assessment
  • Training
  • Policies, procedures, and ongoing monitoring
  • Designation of a Compliance Officer

Compliance Officer and Suspicious Transaction Reporting Obligations

The Compliance Officer plays a crucial role as the point of contact between the regulated entities and the UAF. They are responsible for reporting unusual transactions to the UAF.

Regulated entities in the Dominican Republic must adhere to specific reporting obligations. They are required to report Suspicious Transactions to the UAF within five business days following the transaction’s occurrence or attempted execution:

  • Complex transactions
  • Unusual transactions
  • Significant transactions
  • Transactions lacking an apparent economic or legal justification.

Determining Suspicious Activities

The UAF has published a guide to assist Regulatory Sectors in determining potentially suspicious activities based on their operational experience. Each sector sets assumptions regarding the characteristics of transactions or operations that may raise suspicions.