Financial Crime World

Title: FinCEN Cracks Down on Money Laundering in Puerto Rico: Compliance with Bank Secrecy and Patriot Act Regulations

Overview

Puerto Rico, an unincorporated US territory, is subject to several US federal laws, including those related to money laundering prevention. The Financial Crimes Enforcement Network (FinCEN) is the major anti-money laundering (AML) regulatory body in both the US and Puerto Rico, playing a crucial role in safeguarding the financial system.

About FinCEN

  • Established in 1990
  • US government agency to collect, analyze, and disseminate financial intelligence
  • Achieves objectives through financial transaction data gathering, intelligence sharing, and international partnerships

Compliance with AML/CTF Regulations

Businesses in Puerto Rico must comply with the Bank Secrecy Act (BSA) and the USA PATRIOT Act to prevent money laundering and terrorism financing.

Bank Secrecy Act (BSA)

  • Enacted in 1970 (cornerstone legislation for AML in the US)
  • Requires financial institutions, such as banks, to:
    • Establish AML programs
    • Perform customer due diligence
    • Report suspicious transactions to FinCEN

USA PATRIOT Act

  • Enacted in 2001
  • Expanded government’s investigative tools and monitoring powers
  • Granted law enforcement agencies authority to request court orders to access corporate records

Compliance Measures for Financial Institutions

  • Create efficient BSA compliance systems (internal controls, testing, compliance officer, staff training)
  • Implement monitoring and CDD mechanisms
  • Check for matches with Office of Foreign Assets Control (OFAC) and other government listings
  • Establish reporting procedures for questionable transactions
  • Set up anti-money laundering programs and CDD and customer identification (CIP) processes

Reporting Obligations

  • Currency transaction reports (CTR) and records must be submitted electronically to FinCEN and kept for five years
  • BSA regulated persons must submit SARs to FinCEN for money laundering, tax evasion, check and wire transfer fraud, and any other activities violating federal laws within 30 days of discovery
  • MSBs offering travelers’ checks, money orders, and money transfer services must adhere to specific record-keeping requirements

Conclusion

Compliance with AML/CTF regulations is crucial for financial institutions operating in Puerto Rico. By implementing appropriate measures and fulfilling reporting obligations, institutions help prevent money laundering and maintain a secure financial system.