Puerto Rico Removes High-Risk Designation for Banking Sector After Efforts to Combat Fraud
Puerto Rico’s efforts to combat illicit banking activity have paid off, as the island has been removed from the high-risk list in the US Department of the Treasury’s 2024 National Money Laundering Risk Assessment. This achievement is a result of the island’s commitment to strengthening its financial sector and addressing banking sector fraud cases.
Strengthened Investigative Unit and Regulatory Framework
The Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) has made significant strides in:
- Strengthening its investigative unit
- Supervising regulated entities
- Taking action against institutions that fail to comply with federal and state laws
Commissioner Natalia Zequeira credits these efforts as key factors in the removal of Puerto Rico’s high-risk designation. “This is definitely positive news for Puerto Rico because it means that this financial sector that operates from the island is no longer considered nationally as a risk for the federal financial system,” she said.
New Mandates Aim to Improve Regulatory Framework
The OCIF has passed two new mandates, Acts 44 and 45 of 2024, aimed at improving the regulatory and supervisory framework for International Banking Entities (IBEs) and International Financial Entities (IFE). These mandates aim to:
- Enhance transparency and reporting requirements
- Strengthen oversight and supervision
- Improve risk-based regulation
Commendations and Future Plans
Brian Nelson, the agency’s under secretary for Terrorism and Financial Intelligence, commended Puerto Rico’s efforts during his meeting with Governor Pedro Pierluisi. “The Governor and I… finished a robust discussion on how to further build our partnership to support law enforcement and regulatory agencies in Puerto Rico, as well as the impacts of Treasury’s regulatory reform agenda on Puerto Rico’s financial sector,” he said.
Pierluisi expressed his commitment to continuing to work with Nelson to ensure that Puerto Rico’s banking system remains compliant with current laws. “We will continue to work together and do everything in our power to eliminate the potential risks of terrorism and money laundering in Puerto Rico and thus protect our nation and consumers,” he said.
Previous Efforts and Challenges
Puerto Rico was previously identified as a high-risk jurisdiction by the US Treasury Department’s 2022 National Money Laundering Risk Assessment due to the existence of “cooperativas” and IBEs and IFEs. In recent years, FinCEN has taken action against several Puerto Rican financial institutions for violating anti-money laundering regulations.
The assessment highlighted the potential money laundering vulnerabilities posed by these entities, which are chartered and licensed by territorial authorities. The removal of Puerto Rico’s high-risk designation is a testament to the island’s progress in addressing these challenges.
Conclusion
Puerto Rico’s efforts to combat illicit banking activity have paid off, as the island has been removed from the high-risk list in the US Department of the Treasury’s 2024 National Money Laundering Risk Assessment. This achievement demonstrates the importance of strengthened investigative units and regulatory frameworks in combating financial fraud and money laundering.