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Puerto Rico Takes Steps to Combat Illicit Banking Activity, Removes High-Risk Label
In a significant breakthrough, Puerto Rico has taken substantial steps to combat illicit banking activity, removing it from the high-risk list in the US Department of the Treasury’s 2024 National Money Laundering Risk Assessment. This development comes after recent actions by the island’s central government and legislature.
Recognizing Efforts
According to Governor Pedro Pierluisi, Puerto Rico’s efforts have been recognized by Brian Nelson, the agency’s Under Secretary for Terrorism and Financial Intelligence (TFI). During a meeting at La Fortaleza, the governor’s executive mansion, Nelson praised Puerto Rico’s Office of the Commissioner of Financial Institutions (OCIF) for focusing its resources on:
- Strengthening its investigative unit
- Supervising regulated entities
- Taking firm action against institutions that fail to comply with applicable federal and state laws
Improving Regulatory Framework
The OCIF, led by Commissioner Natalia Zequeira, has implemented two key mandates - Acts 44 and 45 of 2024 - aimed at improving the regulatory and supervisory framework for International Banking Entities (IBEs) and International Financial Entities (IFEs). These entities are subject to oversight by the OCIF to combat money laundering.
Removing High-Risk Label
Zequeira emphasized that the removal from the high-risk list is “positive news” for Puerto Rico, as it indicates that financial institutions operating on the island have adapted their operations to comply with anti-money laundering regulations. While there is still work to be done, compliance and latent risk no longer exist, she said.
Key Illicit Finance Issues
Nelson’s visit to Puerto Rico coincided with his discussion of key illicit finance issues, including:
- Countering illicit fentanyl and narcotics trafficking
- Strengthening anti-money laundering and countering the financing of terrorism (AML/CFT) regulations
- Promoting awareness among the business community of beneficial ownership reporting information requirements
Challenges Faced by IBEs and IFEs
Pierluisi and Nelson also discussed challenges faced by IBEs and IFEs in processing transactions, as many US banks have begun to minimize their exposure risks to these entities by closing their accounts. Pierluisi expressed commitment to continuing to work with the US Treasury to ensure a banking system on the island that is always in compliance with current laws.
US Treasury Oversight
The US Treasury’s oversight, including the 2024 National Money Laundering Risk Assessment, drives the types of reforms seen in Puerto Rico, Nelson said. The passage of Act 273 is an important reflection of this effort.
Conclusion
Puerto Rico’s removal from the high-risk list marks a significant step forward in combating illicit banking activity. As Nelson noted, there is still work to be done, but compliance and latent risk no longer exist. With continued efforts by the OCIF and collaboration with the US Treasury, Puerto Rico can maintain its commitment to ensuring a robust and compliant financial system.