By: Mario Costa, Michelle Sutter.
LatinAlliance presents the 6 most frequently asked questions and answers about the entry into force of the new Instructions for the Prevention, Detection and Control of Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction issued by the Attorney General of the Republic of El Salvador in October 2022.
1- I have a commercial company but I have never been registered in the UIF. Do all the obligations that appear in the instructions apply to me?
Yes, with the entry into force of the new instructions all regulated entities, any company (natural or legal person) must be registered with the FIU and must follow all the obligations that emanate from said instructions, including the preparation and implementation of policies, procedures and controls necessary to prevent and detect suspicious transactions related to the crime of money laundering, financing of terrorism and the proliferation of weapons of mass destruction, and their concealment, and complete the respective process of accreditation before the Financial Investigation Unit (FIU).
2- What are the main obligations of the regulated entities according to the FIU instructions?
a) To adopt and promote policies for the prevention, control and detection of money laundering and asset laundering.
b) To have internal and external auditing bodies in charge of establishing controls for the prevention of money laundering, financing of terrorism, and financing of firearms proliferation.
c) Know and classify the risk for clients, counterparties or suppliers.
d) Appoint a compliance officer and an alternate compliance officer.
e) Make reports of suspicious and unusual transactions and suspicious transaction reports.
f) Make periodic reports of regulated operations.
If the company already has a system and structure for the prevention of money laundering and asset laundering registered before the UIF.
3- Do I have to make any type of update with the entry into force of the new Instructions?
Yes, there is a need to update the policies and procedures to prevent and detect suspicious transactions to the State and follow the process of updating them before the FIU portal.
4- What are some of the changes introduced by the new FIU instructions?
a) There are no exceptions of regulated entities in terms of Prevention, Detection and Control of Money Laundering, so any company (natural or legal person) becomes a regulated entity.
b) The Compliance Officer will now be called Compliance Officer, who will have the obligation to reside in the country and be part of the corporate organization chart, establishing specific requirements for this position.
c) The obligation to know and classify the risk not only of the clients, but also of the counterparties is established.
d) Implementation of standard, enhanced or simplified due diligence mechanisms. Specific requirements are incorporated on how to proceed in the updating of information, continuity of the business relationship and its termination with clients and counterparties.
e) Application of a risk-based approach to the entire Money Laundering and Terrorist Financing Prevention System. Among others.
5- When does the new FIU instructions become effective and how much time do I have to implement the measures required therein?
The new instructions become effective on June 6, 2022, therefore, by that date all obliged parties must be following all the obligations arising from such instructions.
6- What are the consequences for companies (natural or legal person) of not complying with the obligations of the FIU’s instructions?
In case of non-compliance, the obliged subject will have joint and several civil liability, as well as the different forms of criminal co-participation derived from crimes related to money laundering, asset laundering, financing of terrorism and its concealment. This could lead to economic sanctions, deterioration of the relationship with clients and financial entities, imprisonment for their representatives and damage to the corporate reputation.