Financial Crime World

Title: Puerto Rico Removed from High-Risk Money Laundering List: US Treasury’s Nelson Discusses Progress with Pierluisi

Puerto Rico No Longer High-Risk Jurisdiction

In a notable development, Puerto Rico has been taken off the high-risk list in the U.S. Department of the Treasury’s 2024 National Money Laundering Risk Assessment. This follows intensive efforts by the commonwealth’s central government and legislature to strengthen their regulatory and investigative framework.

Meeting with US Treasury Official

Brian Nelson, the Under Secretary for Terrorism and Financial Intelligence (TFI), met with Puerto Rico Gov. Pedro Pierluisi and Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) commissioner Natalia Zequeira to discuss progress on combating illegal banking activity on the island.

Key Discussion Topics

During the meeting, several topics were discussed:

  1. Strengthening AML/CFT regulations: The importance of updating regulatory frameworks and enhancing anti-money laundering and counter-terrorism financing (AML/CFT) efforts was emphasized.
  2. Beneficial ownership reporting: The need to raise awareness amongst the Puerto Rican business community regarding reporting requirements for beneficial ownership was also highlighted.

Passage of New Legislation

The OCIF has recently passed Acts 44 and 45 of 2024, aimed at improving the regulatory and supervisory framework of International Banking Entities (IBEs) and International Financial Entities (IFEs) to combat money laundering.

Key Discussion Points

Some of the significant moments from the meeting include:

  • Progress on illegal banking activity: OCIF’s focus on strengthening its investigative unit, enhancing financial entities’ supervision, and taking firm action against non-compliant institutions was commended.
  • Addressing illicit fentanyl and narcotics trafficking: Discussions centered around the challenges posed by illicit drugs, specifically fentanyl, were held.
  • Support for Puerto Rican regulatory agencies: Commitment was reaffirmed to continue supporting law enforcement and regulatory agencies in Puerto Rico.

Challenges for IBEs and IFEs

Due to the existence of cooperativas, IBEs, and IFEs in Puerto Rico, FinCEN, the Financial Crimes Enforcement Network, identified increased risks in the 2022 National Money Laundering Risk Assessment.

Enforcement Actions

Some of the early enforcement actions against Puerto Rican entities include:

  1. Nodus International Bank Inc. being found in violation of Venezuelan sanctions by the U.S. Treasury Department’s Office of Foreign Assets Control in October 2022.
  2. FinCEN imposing a $15 million civil penalty against Bancrédito International Bank and Trust Corp. for Bank Secrecy Act violations in September 2023.

The US Treasury Official’s visit to Puerto Rico also included discussions with top law enforcement partners regarding counternarcotics trafficking, particularly the illicit fentanyl trade.

Previous FinCEN Exchange in Puerto Rico

This visit followed another significant event: FinCEN Director Andrea Gacki hosted the first-ever FinCEN Exchange in Puerto Rico in February 2023.

Contributions by: María Miranda and Michelle Kantrow-Vázquez