Financial Crime World

Puerto Rico Sees Significant Improvement in Financial Crime Fight, Elimination of Vulnerability List

The United States Treasury Department has taken a significant step towards improving the fight against financial crimes in Puerto Rico by eliminating the island’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.

Elimination from Vulnerability List

According to the Treasury Department’s latest National Money Laundering Risk Assessment (NMLRA) 2024 report, Puerto Rico is no longer included in the section dedicated to Entities not Subject to Comprehensive AML/CFT Requirements. This change comes after a rule issued by the Financial Crimes Enforcement Network (FinCEN) made the requirement equally applicable to such Puerto Rican financial entities, effective March 15, 2021.

Impact on Puerto Rico’s Financial Institutions

The inclusion of these Puerto Rican financial entities on Treasury’s list was seen as a significant issue that affected all of them. However, with this change, Puerto Rico can now put this behind and focus on the many positive steps it has taken to strengthen its financial system.

  • The Commissioner of Financial Institutions in Puerto Rico, Natalia Zequeira, welcomed the move, saying it reflects a recognition of the improved oversight conducted during the last three years.
  • Zequeira stated that the change will allow them to demand strict compliance with applicable laws and regulations from all financial entities operating in Puerto Rico.

Strengthening Regulation and Oversight

In related news, Puerto Rican 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.

  • The legislation seeks to demand an even higher level of compliance with applicable anti-money laundering laws.
  • It also increases the Office of the Commissioner of Financial Institutions’ discretion in granting or denying permits or licenses.
  • The new laws raise minimum capitalization requirements, application fees, broaden the scope of investigations, increase bail requirements, and provide for broader Commissioner authority to deny applications.

Benefits to Puerto Rico’s Economy

The changes will help ensure that international banking and financial entities operating on the island are: + Solvent + Solid + Operate competitively and responsibly + Contribute to Puerto Rico’s economic growth

According to Zequeira, these changes will help ensure that international banking and financial entities operating on our island are solvent, solid, operate competitively and responsibly, and contribute to Puerto Rico’s economic growth.