Puerto Rico’s Financial Entities Removed from US Treasury’s AML/CFT Risk List
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The United States Department of the Treasury has removed Puerto Rico’s International Banking Entities (IBEs), International Financial Entities (IFEs) and credit unions from its list of most significant “vulnerabilities and risks” in its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) policy.
Update in National Money Laundering Risk Assessment 2024 Report
The update is reflected in the Treasury’s National Money Laundering Risk Assessment 2024 report, which no longer includes those Puerto Rican financial entities in the section dedicated to Entities not Subject to Comprehensive AML/CFT Requirements.
Commissioner’s Reaction
Puerto Rico Financial Institutions Commissioner Natalia Zequeira praised the development, stating that it reflects a recognition of the improved oversight conducted by her office over the past three years. She noted that the previous inclusion of these entities on the list had generated a bad reputation for all financial institutions operating in Puerto Rico, even those that were law-abiding.
OCIF’s Efforts to Improve Oversight
Zequeira attributed the change to the OCIF’s efforts to demand strict compliance with applicable laws and regulations from all financial entities operating in Puerto Rico. The commissioner also highlighted the impact of recent legislation signed by Governor Pedro Pierluisi, which aims to strengthen regulation and oversight of IBEs and IFEs.
Strengthened Regulations
The new laws amend the International Banking Center Act and the International Financial Center Act to modernize and strengthen these regulations, making them more efficient, resilient, and better prepared to face changes in the markets. The laws also seek to demand an even higher level of compliance with anti-money laundering laws and grant the OCIF greater discretion in permit or license issuance based on the financial responsibility, experience, character and aptitude of applicants.
Key Changes
The laws introduce:
- Increased capitalization requirements
- Application fees
- Broader scope of requisite investigation to include economic capacity of shareholders and owners
- Increased bail requirements, minimum number of employees required, and license fees
- Insolvency as a cause to deny the renovation of a license
- Broadened commissioner’s authority to deny applications if a shareholder, director or proponent has been convicted of a felony, fraud, money-laundering, moral depravity or tax evasion
Positive Impact for Puerto Rico’s Banking and Financial System
The removal of Puerto Rico’s financial entities from the Treasury’s risk list is seen as a positive development for the island’s banking and financial system. It reflects a recognition of the efforts made by the OCIF to improve oversight and regulation in the sector, and demonstrates a commitment to combating money laundering and terrorist financing activities.