Financial Crime World

Spain: A Hotspot for Financial Crimes and the Evolving AML Regulations

Spain, previously recognized for its thriving economy, now faces growing money laundering (ML) threats due to its sophisticated financial system and high internet penetration rate. With a 94% internet penetration rate since 2022, Spain ranks third in Europe for ML threats. (Moneyval, 2023)

To counter these criminal threats, the Spanish government has taken measures to strengthen its anti-money laundering (AML) and counter-terrorist financing (CFT) framework. This article explores the history, current landscape, and future developments of AML regulations in Spain.

A Brief History of AML Regulations in Spain

Spain has been combating ML since 1988, recognizing it as a criminal offense and intensifying penalties through subsequent amendments to its penal code in 1995 and 2003. Spain is now known for its stringent AML legal framework, as detailed below.

FATF Compliance and the Current Landscape

According to Moneyval’s Mutual Evaluation Report on Spain’s implementation of anti-money laundering and counter-terrorist financing standards, the country is compliant with 28 and largely compliant with 10 of the FATF 40 Recommendations. (Moneyval, 2022) These recommendations cover policies and coordination, money laundering and confiscation, terrorist financing and proliferation financing, preventive measures, transparency, institutional measures, and international cooperation.

Spain’s Regulatory Body: Commission for the Prevention of Money Laundering and Financial Crimes (SEPBLAC)

Founded in 1993, Spain’s primary regulatory body for AML compliance is the Commission for the Prevention of Money Laundering and Financial Crimes, known as Servicio Ejecutivo de la Comisión de Prevención de Blanqueo de Capitales (SEPBLAC). It functions as the country’s financial intelligence unit (FIU) and is responsible for ensuring that financial institutions adhere to Spain’s risk-based anti-money laundering and counter-terrorist financing regulations.

The Risk-Based Approach to AML Compliance

The Risk-Based Approach (RBA) encourages entities to recognize, evaluate, and understand the risk of money laundering and terrorist financing they face. Spanish businesses are obliged to design tailored AML programs based on a thorough risk assessment, outlining the connections between risks and corresponding procedures, policies, and controls. (SEPBLAC, 2023)

Obliged Entities and the Main AML Laws in Spain

AML regulations apply to various sectors, including banks, investment firms, and insurance companies. The Spanish AML Law, passed in 2010, mandates these entities to maintain robust AML programs, comply with reporting and record-keeping obligations, and face the consequences of non-compliance.

The EU’s Anti-Money Laundering Directives (AMLDs) and Royal Decree-Laws

As an EU member, Spain adheres to the AMLDs. The latest directive, 6AMLD, introduced the concept of aiding and abetting, implying that companies must prevent and detect aiding and abetting in money laundering crimes. Spain implemented these provisions through Royal Decree-Law 7/2021.

The Future of AML Compliance: MiCA and the Transfer of Funds Regulation (TFR)

MiCA, set to be implemented in 2024, will bring comprehensive rules for the cryptocurrency sector, while the TFR will extend AML/CFT regulations to crypto service providers. Spanish businesses must adapt their compliance strategies to address these developments.

By implementing these guidelines, Spanish businesses can effectively combat financial crimes and contribute to the nation’s ongoing fight against illicit activities.

Subheadings:

  1. Spain’s ML Threats and the Spanish Government’s Response
  2. A Brief History of AML Regulations in Spain
  3. Spain’s Compliance with FATF Recommendations
  4. Spain’s Regulatory Body: Commission for the Prevention of Money Laundering and Financial Crimes (SEPBLAC)
  5. The Risk-Based Approach to AML Compliance
  6. Obliged Entities and the Main AML Laws in Spain
  7. The EU’s Anti-Money Laundering Directives (AMLDs) and Royal Decree-Laws
  8. The Future of AML Compliance: MiCA and the Transfer of Funds Regulation (TFR)

Bullet points:

  • Spain ranks third in Europe for ML threats due to its sophisticated financial system and high internet penetration rate.
  • Spain is widely recognized for its stringent AML legal framework.
  • Spain is compliant with 28 and largely compliant with 10 FATF 40 Recommendations.
  • The Commission for the Prevention of Money Laundering and Financial Crimes (SEPBLAC) functions as Spain’s financial intelligence unit (FIU).
  • The RBA encourages entities to recognize, evaluate, and understand the risk of money laundering and terrorist financing they face.
  • AML regulations apply to various sectors, including banks, investment firms, and insurance companies.
  • The latest AML directive, 6AMLD, introduced the concept of aiding and abetting in money laundering crimes.
  • MiCA, set to be implemented in 2024, will bring comprehensive rules for the cryptocurrency sector.
  • The Transfer of Funds Regulation (TFR) will extend AML/CFT regulations to crypto service providers.