Financial Crime World

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Puerto Rico’s Financial Institutions Face Heightened Risk Assessment after Latest National Money Laundering Report

San Juan, Puerto Rico - The 2022 National Money Launderling Risk Assessment (NAMLRA) has raised concerns about the financial institutions in Puerto Rico, highlighting potential vulnerabilities and weaknesses in the island’s anti-money laundering (AML) framework. According to the report, lack of transparency, misuse of entities, and inadequate beneficial ownership information are key issues that need to be addressed.

The Report

The NAMLRA is a comprehensive assessment conducted by the US government to identify money laundering risks to the country’s financial system. This year’s report included “special focus” snapshots on topics not previously addressed, including Puerto Rico’s financial sector. The island’s inclusion in the report marks its second consecutive appearance, following its first inclusion in 2021.

Puerto Rico’s Financial Institutions

Puerto Rico’s financial institutions are part of the US financial system, which is supported by a global infrastructure for dollar transactions. The island has a history of designing tax incentives to attract financial services businesses, including Act 52-1989 and Act 273-2012, which provide tax exemptions for international banking centers and financial entities.

Concerns

However, these incentives have raised concerns about the potential for money laundering and terrorist financing. To address these issues, the Office of the Commissioner of Financial Institutions (OCFI) has proposed several solutions, including:

  • Amendments to Act 273 to raise the standard to federal levels
  • Aggressive hiring of examiners
  • Training programs on topics such as cryptocurrency

OCFI Initiatives

The OCFI is also working to strengthen its relationships with law enforcement agencies, including FinCEN, FDIC, FED, IRS, FBI, and others. The agency has also been reviewing license applications and issued licenses for international banking entities (IBEs) and financial entities (IFEs).

Recommendations for Financial Institutions

For Puerto Rico’s financial institutions, the NAMLRA’s findings serve as a wake-up call to strengthen their compliance programs and internal controls. Key factors to consider include:

  • Safety and soundness
  • Risk management
  • Robust cybersecurity programs

“We urge all financial institutions in Puerto Rico to take heed of these recommendations and work towards creating a more secure and transparent financial system,” said W. Stephen Muldrow, US Attorney for the District of PR. “Dare to be great!”