Puerto Rico Cracks Down on Anti-Money Laundering Compliance among International Banking Entities

In an exclusive interview with Thomson Reuters Regulatory Intelligence, Davis Polk partner Dan Stipano discussed the ongoing efforts to strengthen Anti-Money Laundering (AML) compliance in Puerto Rico.

Renewed Commitment to AML Compliance in Puerto Rico

The conversation took place shortly after notable remarks from two key figures in the territory’s financial sector. Andrea Gacki, the director of the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), and Natalia Zequeira Diaz, Puerto Rico’s Commissioner of Financial Institutions, signaled a renewed commitment to bolstering AML compliance in Puerto Rico.

Commissioner Zequeira made it clear during her recent remarks that her office will not tolerate non-compliant International Banking Entities (IBEs). She is not trying to drive IBEs out of existence, but stringent actions will be taken against those that fail to adhere to AML regulations. – Dan Stipano, Davis Polk

regulatory Scrutiny and the IBE Statute

Adding to the growing concern, Puerto Rico has recently enacted amendments to its IBE statute. These changes significantly increase the requirements for IBEs and expand the Banking Commissioner’s authority.

• Increased Requirements for IBEs: Newly enacted amendments include heightened reporting obligations and stricter scrutiny for high-risk customers and transactions.
• Expanded Authority for the Banking Commissioner: The Banking Commissioner now has the power to impose penalties and sanctions, revoke IBE licenses, and refer cases to law enforcement for further investigation.

Cooperative Regulatory Scrutiny for AML Failures

Amid this heightened regulatory scrutiny, Puerto Rican banks are faced with cooperative actions against AML failures. The U.S. official’s stern stance on non-compliance was detailed in a recent Thomson Reuters Regulatory Intelligence article (subscription required).

Puerto Rican banks now under heightened, cooperative regulatory scrutiny for anti-laundering failures – Thomson Reuters Regulatory Intelligence, February 27, 2024 (subscription required)

The article highlights that U.S. officials are collaborating with other international regulatory bodies to closely monitor and address any instances of non-compliance with AML regulations among Puerto Rican banks. This increased cooperation reflects a renewed emphasis on maintaining the integrity of the global financial system and combating money laundering activities.