Puerto Rico Faces Financial Crime and Terrorism Funding Threats, US Treasury Official Warns

Financial Vulnerabilities Remain Despite Progress

A high-level official from the U.S. Treasury’s Office of Terrorism and Financial Intelligence has warned that Puerto Rico remains vulnerable to financial crime and terrorism funding despite recent progress in combating illicit activities.

Meeting with Government Counterparts and Commercial Banking Officials

Brian Nelson, Under Secretary for Terrorism and Financial Intelligence, met with government counterparts and commercial banking officials in San Juan yesterday to discuss the island’s ongoing struggle against money laundering, weapons proliferation, corrupt actors, and other national security threats.

Priority Areas for Attention

• Countering narcotics trafficking from Puerto Rico to the mainland United States
• Combating fraud and public corruption
• Enhancing supervision of local financial entities

Nelson emphasized that illicit actors are exploiting supervisory gaps to launder funds through the U.S. financial system. He called on commercial banks to identify suspicious transactions associated with these activities and to work more closely with law enforcement agencies to combat these threats.

Concerns About Cash Transactions and Cooperativa Sector

• Growing trend of cash transactions for real estate purchases in Puerto Rico, which creates transparency and reporting issues
• Limited transparency in Puerto Rico’s growing cooperativa sector, which poses significant threats to the integrity of the U.S. financial system

Nelson identified these areas as requiring enhanced regulation, supervision, and cooperation to mitigate the significant threats they pose.

Treasury Department Actions

The Treasury Department has taken steps to address these concerns, including:

• Implementing the Corporate Transparency Act to launch a beneficial ownership registry
• Increasing transparency in the U.S. real estate sector and investment advisors

However, Nelson stressed that more needs to be done to bolster Puerto Rico’s financial sector against abuse by illicit actors.

FinCEN Exchange Results

The meeting also discussed the results of a recent FinCEN Exchange held in February, which brought together federal law enforcement agencies, national security officials, and commercial banks to share information and best practices for combating illicit financial activity.