Financial Crime World

Puerto Rico Regulator Introduces New Requirements for Financial Institutions

San Juan, Puerto Rico - The Commissioner of the Office of the Commissioner of Financial Institutions (OCFI) has introduced a series of amendments aimed at strengthening regulations for financial entities operating in Puerto Rico. These new requirements are set to take effect on May 16, 2024.

Reporting Requirements

Both International Finance Entities (IFE) and International Banking Entities (IBE) will be required to submit annual reports of their financial conditions and results of operations within 90 days of the closing of each fiscal year. This will help improve transparency and regulatory oversight in the financial sector.

Additionally, IFEs and IBEs are allowed to destroy their books, records, files, or documents after five years since the last entry or since the date any obligation ceased being enforceable.

Stricter Requirements for International Banking Entities (IBE)

The Commissioner has introduced new requirements for IBEs, including:

  • Stricter rules on transfers of capital or control. Any transfer of equity or control that would result in a person directly or indirectly acquiring 10% or more of any class of capital shares must be approved by the Commissioner in advance.
  • An application fee of $35,000 for such approval.

The regulations also establish legal reserve requirements for IBEs authorized to accept deposits. These reserves may not exceed 20% of total deposits payable on demand maintained by the entity.

International Finance Entities (IFE) Requirements

For IFEs, the new regulations introduce stricter requirements for permit and license applications:

  • Only legal entities can apply for a permit to organize an IFE.
  • The application fee is $50,000.
  • The Commissioner will request personal and business information from any person who directly or indirectly owns or controls any participation in the capital of an IFE.

IFE licenses and renewals are also subject to new requirements:

  • An annual license fee of $50,000 for original licenses and $25,000 for each annual renewal.
  • The Commissioner may deny issuance of a license if the proponent lacks financial responsibility, aptitude, character, or experience.

Penalties and Sanctions

The regulations also impose penalties and sanctions for late renewals of licenses:

  • IFEs must include with their application a payment of $25,000 for research and pay any excess costs resulting from an investigation by the Commissioner.
  • Late renewal fees will be determined on a case-by-case basis.

Both acts will become effective 90 days after their approval on May 16, 2024.