Financial Crime World

Puerto Rico Takes Steps to Prevent Financial Crimes with FinCEN’s Guidance

As an unincorporated US territory, Puerto Rico is subject to federal laws and regulations aimed at preventing financial crimes. In an effort to combat illicit activities, the Financial Crimes Enforcement Network (FinCEN) is intensifying its efforts to protect Puerto Rico’s financial system from money laundering and terrorism financing.

FinCEN’s Role in AML Efforts

FinCEN plays a vital role in overseeing Anti-Money Laundering (AML) activities, collecting and analyzing financial data, disseminating relevant intelligence, and employing financial and law enforcement tools to safeguard the system from unlawful use. The agency’s efforts are crucial in criminal, tax, and regulatory investigations and prosecutions.

Primary AML Regulations

Two primary AML regulations that financial institutions in Puerto Rico must adhere to are:

  • Bank Secrecy Act (BSA): Requires banks and financial institutions to develop robust customer due diligence procedures, implement screening mechanisms, and maintain record-keeping requirements. These measures have proven invaluable in combating money laundering and terror financing.
  • USA PATRIOT Act: Aimed at preventing and penalizing acts of terrorism 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 for Financial Institutions

To ensure compliance with AML regulations, financial institutions in Puerto Rico must:

  • Establish comprehensive BSA compliance systems, including internal controls, independent testing, designating a Compliance Officer, providing employee training, and setting up effective monitoring and customer due diligence mechanisms
  • Implement risk-based AML programs
  • Develop customer identification programs
  • Maintain records of cash transactions
  • File Currency Transaction Reports (CTRs) electronically to FinCEN

Additional Requirements for Money Service Businesses

Money service businesses (MSBs) in Puerto Rico must:

  • Keep records of cash acquisitions amounting to $3,000-$10,000
  • Record information for each money transfer above $3,000
  • File reports of suspicious activity, which are exempt from disclosure requirements
  • Not inform customers about Suspicious Activity Reports (SARs) filed

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. The agency’s efforts will help prevent illicit activities, protect national security, and maintain public trust in the financial sector.