Financial Crime World

Ecuador Enacts New Law to Prevent and Eradicate Money Laundering

Quito, Ecuador - Strengthening Efforts Against Financial Crime

On July 21, 2016, Ecuador’s legislature approved a new law aimed at enhancing the country’s fight against financial crime. The Law on the Prevention and Eradication of Money Laundering (Ley Orgánica de Prevención, Detección y Erradicación del Delito de Lavado de Activos y del Financiamiento de Delitos) strengthens reporting requirements for suspicious transactions and introduces additional penalties for tax fraud.

Key Provisions of the New Law

  • Expanded Reporting Requirements: Financial institutions and non-financial businesses must report suspicious transactions involving amounts of more than $10,000 within four days. This obligation has been extended to include:
    • Mail service providers
    • Transportation companies that handle cash or valuables
    • Trust administrators
    • Cooperatives
    • Foundations
    • NGOs
    • Individuals or businesses involved in the purchase or sale of vehicles, ships, boats, or airplanes
  • Targeting Property Transfers: The law targets property transfers, possession, use, marketing, internal trade, or external trade, and gratuitous or for-profit transactions of assets in general.
  • Tax Fraud Penalties: An amendment to Ecuador’s Integral Penal Code (Código Orgánico Penal Integral) penalizes tax fraud committed through third parties.

Reforms and Enhancements

  • Autonomous Body: The Financial Analysis Unit, currently under the Attorney General’s office structure, will be transformed into an autonomous body within the Coordinating Ministry of Economic Policy and renamed the Unit of Financial and Economic Analysis.
  • International Compliance: Ecuador’s adoption of this new law is part of its efforts to strengthen anti-money laundering regulations and comply with international standards.

Conclusion

Ecuador’s enactment of the Law on the Prevention and Eradication of Money Laundering aims to reduce the risk of financial crime and promote a safer financial environment for businesses and individuals. By expanding reporting requirements, introducing additional penalties for tax fraud, and transforming the Financial Analysis Unit into an autonomous body, Ecuador is strengthening its efforts against financial crime.