On September 4, SEPRELAD issued Resolution No. 196 (the "Resolution"), which approves the new Regulations for the Prevention of AL and FT for companies and persons who are commercially engaged or have as their main economic activity the import, purchase and sale or consignment of motor vehicles (the "Obliged Subjects"), repealing Resolution 85/15, which previously regulated the matter.
In Paraguay, the distributors of more than 90 international brands of new motor vehicles are grouped in the Chamber of Automotive and Machinery Distributors ("CADAM"). In turn, there are more than 700 companies and individuals in the country engaged in the sale or used motor vehicles.
Scope:
In the same way that the persons and companies involved in the purchase and sale of real estate, the Obliged Subjects bound by the Resolution must also implement an integral system of prevention of AL and FT, even if the activities are delegated to intermediaries.
Risk Factors to be Considered:
Such as those engaged in the purchase and sale of real estate, the Obliged Subjects involved in the purchase and sale and consignment of vehicles must develop and implement methodologies and procedures for the identification, evaluation and mitigation of the risks of AL/FT, based on criteria established both by themselves and by SEPRELAD. The evaluation of the risks of AL/FT must also be made at least every two years, and its methodology must be verified at least every four years, considering risk factors identical to those usually faced by individuals and companies involved in the purchase and sale of real estate, summarized in point 2. This new Resolution abolishes the risk threshold of US$ 10,000 per transaction provided for in Resolution 85/15.
Obliged Subjects must also evaluate the level of exposure to AL/FT risks associated with the new products and/or services they eventually offer and if they decide to extend their coverage range to new geographical areas, they must prepare an evaluation of the level of exposure to AL/FT risks.
Compliance Officer:
Like the persons and companies involved in the purchase and sale of real estate, the Obliged Subjects must have a Compliance Officer, with a higher hierarchical rank, with autonomy and independence in the exercise of their functions, who must have sufficient support and resources, and in sole proprietorships the position may fall on the owner. The Obliged Subjects may also appoint a Compliance Responsible in each branch.
AL/FT Prevention Manual and Code of Ethics:
The AL/FT prevention policies of the Obliged Subjects and the applicable legal norms should also be compiled in a manual.
Just like the persons and companies involved in the purchase and sale of real estate, the Obliged Subjects must have a Code of Ethics and Conduct, with the ethical principles they must follow. The requirement of the Code of Ethics and Conduct was not provided for in Resolution 85/15 either.
The Obliged Subjects gathered in a guild, such as CADAM, may adopt a collective Code of Ethics and Conduct.
Audits:
In the same way as the persons and companies involved in the purchase and sale of real estate, the Obliged Subjects have the burden of evaluating their AL/FT prevention procedures on an annual basis. This can also be done by the Compliance Officer, through a report with the verifications made and the conclusions reached, which must be made known to SEPRELAD within 90 days of the closing of the financial year.
The AL/FT prevention procedures must also be submitted to an external audit, and then the report must be sent to SEPRELAD within 180 days after the closing of each audited financial year.
Know Your Customer or KYC:
Also as a novelty, the Resolution includes the possibility of applying an abbreviated KYC procedure in the following cases
a) Purchase transactions with a single total payment equal to or less than 15 minimum wages (approximately US$ 4,700).
b) Term operations in the amount of up to 20 minimum salaries (approximately US$ 6,200) per year.
This makes the procedures simpler, as less documentation is required from clients when the risk is lower.
It is also possible to delegate the KYC procedure to third parties.
Reports:
The Resolution maintains the requirement to report suspicious operations to SEPRELAD by means of a STR, as well as to submit "negative reports" if they do not make a STR within a period of three months.
Sanctions and Legal Effects:
Failure to comply with these obligations can result in significant damage to the environment.