Portugal Fights Compliance Risks in Finance, But Room for Improvement Remains

Portugal has made significant strides in implementing the Financial Action Task Force (FATF) recommendations to combat money laundering and terrorist financing. However, a closer look at the country’s mutual evaluation reveals that there are still compliance risks lurking beneath the surface.

Assessing Risk and Applying a Risk-Based Approach

While Portugal is largely compliant with the FATF recommendation on assessing risk and applying a risk-based approach (R.1), there are concerns about the lack of clarity in the application of risk criteria and the need for more robust customer due diligence measures.

National Cooperation and Coordination

Portugal has made progress in establishing effective national cooperation and coordination mechanisms, but there is still room for improvement in sharing information between authorities and enhancing international cooperation (R.2).

Money Laundering Offence and Confiscation Measures

The country’s laws criminalize money laundering, but there are concerns about the lack of sufficient penalties and the need for more effective confiscation measures (R.3).
While Portugal has made efforts to improve its confiscation regime, there is still a need for more effective provisional measures to prevent the dissipation of assets (R.4).

Terrorist Financing Offence

Portugal has criminalized terrorist financing, but there are concerns about the lack of sufficient penalties and the need for more effective measures to disrupt terrorist financing activities (R.5).

Targeted Financial Sanctions

The country’s sanctions regime is largely compliant with FATF recommendations, but there is still room for improvement in enhancing transparency and ensuring that targeted financial sanctions are effectively implemented (R.6).
Portugal has made progress in implementing targeted financial sanctions related to proliferation, but there are concerns about the lack of sufficient resources and the need for more effective measures to prevent the diversion of funds (R.7).

Other Areas of Concern

Non-profit organisations: While Portugal has made efforts to regulate non-profit organisations, there is still room for improvement in ensuring that these entities are effectively monitored and supervised (R.8).
Financial institution secrecy laws: The country’s financial institution secrecy laws pose a risk to the effective implementation of AML/CFT measures, and there is a need for more robust information sharing between authorities (R.9).
Customer due diligence: Portugal has made progress in implementing customer due diligence measures, but there are concerns about the lack of sufficient training and resources for financial institutions to effectively implement these measures (R.10).

Conclusion

In conclusion, while Portugal has made significant progress in implementing AML/CFT measures, there is still room for improvement in many areas. The country must continue to prioritize the effective implementation of these measures to prevent money laundering and terrorist financing.

Recommendations

The FATF has identified several areas where Portugal needs to improve its AML/CFT regime, including:

Enhancing transparency and beneficial ownership requirements for legal persons (R.24).
Improving the training and resources available to financial institutions to implement customer due diligence measures (R.10).
Strengthening national cooperation and coordination mechanisms to share information between authorities and enhance international cooperation (R.2).
Implementing more effective provisional measures to prevent the dissipation of assets in confiscation cases (R.4).