Scope
On August 23, 2021, SEPRELAD issued Resolution 299, establishing Regulations on the Prevention of Asset Laundering and Financing of Terrorism for lawyers and accountants (the "Regulations"), even if they carry out their activities independently, unless they do so in a relationship of dependency, only when acting in the name or on behalf of their clients, in the following operations:
- Purchase and sale of real estate;
- Management of money, securities and other client assets;
- Administration of bank, savings or securities accounts;
- Organization of contributions for the creation, operation or administration of legal persons;
- Creation, operation or administration of legal persons, national or foreign;
- Creation of trusts, investment funds and other assets of affectation, national or foreign;
- Purchase and sale of shares or participations of legal persons;
- Acting or arranging for another person to act as trustee of a trust, or to perform an equivalent function for another form of legal structure;
- Provision of a registered address, business address or physical space, postal or administrative address for a legal person or a legal structure; or
- Acting or arranging for another person to act as a nominal shareholder for another person.
The requirements of the Regulations do not apply when a lawyer or an accountant provides advisory or consulting services, or when a lawyer acts as a sponsor or solicitor in judicial, administrative, arbitration or mediation litigation.
Asset Laundering and Terrorist Financing Prevention ("AL/TF") System
Thus, if a lawyer or accountant carries out any of the activities detailed in the scope of the Regulations within the framework of their services (the "Obliged Subjects"), they must implement a comprehensive LA/FT prevention system, with policies comprising compliance and risk management components, and procedures to identify, assess, mitigate and monitor the AL/TF risks to which they are exposed.
AL/TF Risk Self-Assessment
In turn, Obliged Subjects must develop and implement methodologies and procedures to identify, evaluate and mitigate the risks of AL/TF to which they are exposed, taking into account the results they obtain through a self-assessment with a risk matrix elaborated for this purpose, as well as the risks detailed in the National Risk Assessment of SEPRELAD.
In the evaluation process, at least the following factors should be considered: clients served; the services provided; its distribution channels; and the geographical area where they operate.
Compliance Officer
When Obliged Subjects integrate a corporate structure, their highest authority is responsible for implementing the AL/TF prevention system, and for appointing a Compliance Officer, who must have sufficient resources to perform its function. The person must be suitable for the position and must not have a conflict of interest generated by another position held and the function in question. In the case of freelancers, the role falls on themselves.
LA/FT Prevention Manual
The policies and procedures related to compliance with the AL/TF prevention system must be included in a manual, taking into account the nature and characteristics of the Obliged Subjects, which must be approved by their highest authority. For freelancers, the manual should at least include the due diligence procedures for clients, identification of final beneficiaries, and the origin of the funds used in the transaction.
Audits
If the annual turnover of the Obliged Subjects exceeds the threshold established by the State Subsecretariat for Taxation (Subsecretaría de Estado de Tributación or “SET”), so that their financial statements must be submitted to an external audit, their LA/FT prevention system must also be examined by an external auditor at the same time. The report must then be submitted to SEPRELAD.
Training
Obliged Subjects must have an annual training program, approved by their highest authority, to instruct partners, associates, directors, managers, employees and collaborators, whether they are directly linked or outsourced, regarding the policies and procedures of AL/TF in force. A record of each training must be left, with its date, topics discussed and attendees, and it must be kept for five years.
Client Knowledge
In any transaction provided for in the scope of the Regulations for an amount equal to or greater than 50 minimum wages (approximately US$ 16,367), Obliged Subjects must carry out a process of knowledge of the client or clients involved (Know your Client or "KYC"), to know their identity, as well as the identity of the final beneficiary, if any, understand the purpose of the relationship and operations, establish the profile of the client or clients, and verify that their operations are compatible with it. The KYC process also requires proper monitoring of clients’ operations.
If in the context of a transaction the assessment determines that the risks of AL/TF are low, an abbreviated KYC process can be applied, with lower documentary requirements. If the assessment determines that the risks in question are high, an expanded KYC process should be applied, increasing the frequency of controls, applying additional verification measures, and performing continuous and constant monitoring of operations.
If the KYC procedure cannot be carried out satisfactorily, the relationships should not be initiated and the relationships already initiated should be terminated.
The KYC process can be delegated to third parties. However, the final responsibility for its correct execution remains with the Obliged Subjects.
Records
Obliged Subjects must leave a documentary record of all the transactions reached by the Regulations, as well as the KYC processes executed within its framework, keeping them for five years, since a transaction was made, or since the relationship with a client ended, whichever happens last.
Reports
All operations reached by the Regulations in which suspicions arise that they may be involved in AL/TF activities, must be reported to SEPRELAD by the Obliged Subjects.
Sanctions
Under Law 1.015/97, breaches of the Regulations may result in administrative sanctions against legal persons and natural persons. The natural persons involved, whether they are Obliged Subjects or collaborators of these, may be sanctioned by SEPRELAD with: warning; public reprimand; fine of up to 500 minimum wages (approximately US$ 162,000); fine of between 1% and 10% of the amount of the operation involved; removal from office with disqualification from three to 10 years for the exercise of management and administrative positions; the cancellation of authorizations held by them; and for partners with managerial positions, the suspension of dividend distribution for up to three years. On the other hand, legal persons can be sanctioned with: warning; public reprimand; fine of up to 5,000 minimum wages (approximately US$ 1,620,000); fine of up to 50% of the amount of the operation involved; or suspension, closure or disqualification from operating.