Puerto Rico Takes Steps to Combat Money Laundering, Removed from High-Risk List
Puerto Rico’s central government and legislature have taken significant steps to strengthen its regulatory framework, leading to the island being removed from the U.S. Department of the Treasury’s 2024 National Money Laundering Risk Assessment high-risk list.
Strengthened Regulatory Framework
According to Governor Pedro Pierluisi, the efforts made by the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) have paid off. The OCIF has focused on strengthening its investigative unit and supervising financial entities under its regulation. Additionally, the agency has taken action against institutions that do not comply with applicable federal and state laws and regulations.
Recent Mandates
Two recent mandates, Acts 44 and 45 of 2024, were passed to improve the regulatory and supervisory framework for International Banking Entities (IBEs) and International Financial Entities (IFE). These acts aimed at combating money laundering and have been implemented by the OCIF to ensure compliance with anti-money laundering and countering the financing of terrorism regulations.
Removal from High-Risk List
“This is definitely positive news for Puerto Rico,” said OCIF Commissioner Natalia Zequeira. “As it means that our financial sector is no longer considered a risk to the federal financial system. While there’s still more work to be done, compliance and latent risk no longer exist.”
Meeting with U.S. Treasury Officials
U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson met with Governor Pierluisi, OCIF Commissioner Zequeira, and leaders from the commercial banking sector to discuss key illicit finance issues. These included countering illicit fentanyl and narcotics trafficking, strengthening anti-money laundering regulations, and promoting awareness among the Puerto Rican business community of beneficial ownership reporting information requirements.
Support for Compliance
Nelson praised the progress made by Puerto Rico, stating that the agency’s oversight, including the 2024 National Money Laundering Risk Assessment, “drive the types of reforms that we’re seeing here.” He also committed to continuing to provide support to ensure a banking system on the island that is always in compliance with the current rule of law.
Challenges Faced by IBEs and IFEs
The Governor and Nelson discussed the challenges faced by IBEs and IFEs in processing their transactions. Many U.S. banks have begun to minimize their exposure risks to these entities by closing their accounts. Pierluisi emphasized the importance of continuing to work together to eliminate potential risks of terrorism and money laundering in Puerto Rico and protect consumers.
FinCEN Exchange
The visit follows that of Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), who hosted the first-ever FinCEN Exchange in Puerto Rico in February. Puerto Rico was previously identified as a high-risk jurisdiction in 2022 due to the existence of “cooperativas” and IBEs/IFE, which may present money laundering vulnerabilities to the U.S. financial system.
Key Takeaways
- Puerto Rico has taken significant steps to strengthen its regulatory framework
- The island has been removed from the U.S. Department of the Treasury’s 2024 National Money Laundering Risk Assessment high-risk list
- The OCIF has focused on strengthening its investigative unit and supervising financial entities under its regulation
- Recent mandates have improved the regulatory and supervisory framework for IBEs and IFEs
- The U.S. Treasury will continue to provide support to ensure a banking system in Puerto Rico that is always in compliance with the current rule of law