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Preventing Money Laundering and Terrorism Financing: Regulations and Obligations

Purpose

The primary objective of these regulations is to prevent and combat money laundering (ML) and terrorism financing (TF) by establishing rules for reporting entities, such as banks, financial institutions, and other organizations that provide services related to financial transactions.

Key Points

Beneficial Ownership

• Reporting entities must identify and verify the beneficial owner of a customer, even if no one else is identified.
• If no beneficial owner can be determined after exhausting all possible means, the natural person holding the position of administrator of the customer shall be considered as the beneficial owner.

Risk Assessment

• Reporting entities must undertake actions related to the identification and assessment of risks of money laundering and terrorism financing in their area of activity.
• This includes assessing risks at the national level, as well as using criteria and factors established by authorities with supervisory functions.

Risk-Based Approach

• Based on the results of the risk assessment, reporting entities must use a risk-based approach to prevent and mitigate money laundering and terrorism financing.
• The actions taken should be proportional to the identified risks in their field of activity.

Due Diligence Measures

• Reporting entities must apply due diligence measures that establish their scale depending on customer profiles, identified ML/TF risks, country (jurisdiction) profiles, business relationships, goods, services, or transactions, and distribution networks.
• Reporting entities can apply simplified due diligence measures for customers with lower ML/TF risks and enhanced due diligence measures for those with higher identified risks.

National Risk Assessment

• The Office for Prevention and Fight against Money Laundering must organize, carry out, and update every three years a money laundering and terrorism financing risk assessment at the national level to optimize normative, institutional, and policy frameworks; distribute resources efficiently; and inform public authorities, professional associations, and reporting entities about identified risks.

Reporting Entities’ Obligations

• Reporting entities must identify and assess ML/TF risks in their field before launching new products or services, using new technologies, or developing existing ones.

Conclusion

By following these regulations, reporting entities can effectively prevent and combat money laundering and terrorism financing, ensuring a safer financial environment for all stakeholders.