Financial Crime World

Puerto Rico’s Financial Entities Removed from US Treasury’s List of Money Laundering Risks

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The United States Treasury Department has removed Puerto Rico’s International Banking Entities (IBEs), International Financial Entities (IFEs) and Cooperatives from its list of most significant “vulnerabilities and risks” related to anti-money laundering/combating the financing of terrorism (AML/CFT) policy. This change is reflected in the Treasury’s latest National Money Laundering Risk Assessment (NMLRA) 2024 report, released this month.

Improved Oversight and Regulation

According to the report, Puerto Rico’s financial entities are no longer included in the section dedicated to Entities not Subject to Comprehensive AML/CFT Requirements. Previously, the Treasury had highlighted the risks represented by IBEs, IFEs and cooperatives from Puerto Rico due to their lack of federal regulation.

However, a rule issued by the Financial Crimes Enforcement Network (FinCEN) in 2021 made the requirement equally applicable to such Puerto Rican financial entities. As a result, those entities are now required to implement AML compliance programs and are subject to criminal and civil penalties if they fail to do so.

Strengthened Regulation and Oversight

Puerto Rico Commissioner of Financial Institutions Natalia Zequeira welcomed the change, stating that it reflects “a recognition of the improved oversight we have been conducting during the last three years to demand from all financial entities operating in Puerto Rico the strictest compliance with applicable laws and regulations.”

Additionally, Governor Pedro Pierluisi signed into law legislation aimed at strengthening regulation and oversight of IBEs and IFEs on the island. The new laws amend the International Banking Center Law (52-1989) and the International Financial Center Law (273-2012) to:

  • Modernize and strengthen both laws, making them more efficient, resilient and better prepared to face changes in the markets.
  • Demand an even higher level of compliance with applicable anti-money laundering laws.
  • Increase the Office of the Commissioner of Financial Institutions’ discretion in granting or denying permits or licenses.
  • Broaden the scope of investigations.

The legislation also raises minimum capitalization requirements, application fees, bail requirements, and fees to obtain and renovate licenses, among other measures.

Increased Expectations for Financial Entities

Zequeira emphasized that the legislation signed into law by the Governor “raises the bar” for financial entities operating in Puerto Rico, ensuring they are:

  • Solvent: able to meet their financial obligations.
  • Solid: financially stable and resilient.
  • Competitive: able to operate effectively in the market.
  • Responsible: complying with all applicable laws and regulations.
  • Contributing to economic growth: supporting the island’s economy.

The removal of Puerto Rico’s financial entities from the US Treasury’s list of money laundering risks is a significant step forward in ensuring the integrity of the financial system on the island.