Escribanía - 26/04 - Parte 3

Class Overview and Introduction

Initial Engagement

• The instructor greets the students, confirming audio connectivity.

• The instructor checks attendance, noting that 16 out of 21 students are present, with more joining.

Class Motivation

• The instructor encourages students to maintain a positive mindset as it is Friday, likening it to a pre-holiday Monday.

Course Content: Anti-Money Laundering

Recap of Previous Class

• The class previously covered anti-money laundering (AML) regulations and the role of the Financial Information Unit (FIU).

• Plans for the next class include transitioning to tax-related topics, specifically income tax.

Key Concepts in AML

• Discussion on mandatory compliance measures such as maintaining a manual and annual training for notaries.

• Emphasis on knowing the client as a fundamental rule in AML practices; this involves creating a detailed client file.

Client Documentation Requirements

Client File Composition

• A comprehensive client file must include standard identification data along with additional information required by AML regulations.

Politically Exposed Persons (PEPs)

• Importance of identifying whether clients are politically exposed persons (PEPs), which is regulated under specific resolutions from FIU.

Regulatory Framework for PEP Identification

Legal Obligations

• Regulations aim to detect illicit asset usage by public officials; PEP status includes various government roles and their close associates.

Declaration Responsibilities

• Clients must declare their PEP status accurately; responsibility lies with them to provide correct information according to regulatory articles.

Practical Implications of PEP Declarations

Document Management Concerns

• In practice, declarations may be included in legal documents rather than kept separately, raising concerns about accessibility during audits.

Digital vs. Physical Records

• Both physical and digital records are acceptable for maintaining client files; however, ensuring easy access during regulatory reviews is crucial.

Consequences of PEP Status Declaration

Enhanced Due Diligence Requirements

Understanding the Role of Notaries and Legal Obligations

Documentation Requirements for Politically Exposed Persons (PEPs)

• The primary tool for notaries to control transactions involving clients declared as politically exposed persons (PEPs) is the documentation proving the lawful origin of funds.

• Notaries must utilize their professional tools effectively, ensuring that they request necessary supporting documents without overwhelming clients with irrelevant information.

• When a client declares themselves as a PEP, they must acknowledge having read relevant resolutions (11/2011 and 35/2023), which clarifies their responsibilities regarding this declaration.

• It is essential for clients to specify under which article and clause they classify themselves as PEPs during the deed signing process.

Responsibilities of Notaries and Lawyers

• Starting April 15, 2024, lawyers will also be considered obligated subjects under specific regulations related to anti-money laundering efforts.

• Lawyers are only subject to obligations concerning certain listed activities; thus, it’s crucial to refer to applicable resolutions defining these activities.

• The focus is on lawyers acting in advisory or representative roles rather than those serving as defenders in legal matters.

Understanding Obligated Subjects vs. PEP Status

• There is a distinction between "obligated subjects" and "politically exposed persons"; not all obligated subjects are PEPs, nor vice versa.

• Obligated subjects have specific duties outlined in law 25246, including collecting and reporting information related to financial transactions.

Client Declarations Regarding PEP Status

• Clients must declare whether they are PEPs when engaged in specific activities; this applies equally to individuals acting on their own behalf or representing others.

• The aim is to identify illicit assets linked to public functions by requiring declarations from clients about their status as PEPs.

Beneficial Ownership and Final Beneficiaries

• In cases involving legal entities, identifying final beneficiaries—individual humans who hold significant stakes—is critical for compliance with regulations regarding PEP declarations.

Understanding the Role of Beneficiaries in Legal Structures

The Concept of Beneficiary and PEP Declaration

• The discussion begins with the definition of a "beneficiary" in legal terms, emphasizing that any individual acting on their own behalf or as a final beneficiary of a legal entity must declare their status.

• The necessity for Politically Exposed Person (PEP) declarations is highlighted, aiming to uncover illicit assets linked to public functions through a chain of accountability.

• It is noted that companies can act as fronts, but the focus should remain on identifying the actual human beneficiaries behind these entities.

Importance of Compliance and Reporting

• There is an emphasis on the importance of compliance; failing to request necessary declarations cannot be justified. Documentation may not always reveal illicit origins, but due diligence is essential.

• The speaker stresses that one cannot neglect their responsibilities under regulatory frameworks; every client must declare if they are a PEP or not.

Obligations for Specific Professions

• Clarification is provided regarding clients who are obligated subjects under regulations. If they are not registered properly, it must be reported accordingly.

• Various professions such as real estate agents, accountants, and lawyers have specific obligations based on their activities and thresholds set by regulations.

Regulatory Framework for Accountants

• The conversation shifts to accountants' obligations under UIF resolutions. For instance, only registered accountants involved in transactions above certain thresholds are considered obligated subjects.

• Specific criteria for accountants include involvement in significant transactions or certifications related to financial statements exceeding defined limits.

Distinction Between Personal and Professional Transactions

• A distinction is made between personal transactions versus those conducted on behalf of clients. If an accountant acts personally rather than professionally, they must still declare their status according to UIF guidelines.

• It’s reiterated that when professionals engage in activities tied directly to their profession (like notarizing sales), they fall under mandatory reporting requirements as obligated subjects.

Legal Responsibilities and Client Consultation

Understanding Legal Obligations

• The lawyer emphasizes the importance of being registered ("de alta") to avoid legal repercussions. If a client is not registered, it must be reported.

• It is logical for professionals to consult regarding their responsibilities, especially in legal and notarial matters, as ignorance can lead to significant issues.

• Professionals should recognize when they need further information or expertise; failing to do so can hinder their ability to act effectively.

Client Representation and Documentation

• When representing a client in transactions like sales, it's crucial to confirm their registration status and request a sworn declaration if necessary.

• Legal professionals (lawyers, accountants, notaries) have specific activities defined by regulations that clarify their obligations regarding client representation.

Reporting Requirements

• A systematic reporting process is essential; documentation of reviews conducted on clients must be maintained for compliance purposes.

• Professionals are advised to check against lists related to terrorism financing using provided links and maintain records of these checks.

Risk Assessment in Client Segmentation

• It's important for professionals to segment clients based on risk levels (low, medium, high), considering various parameters such as complexity of operations or age of individuals involved.

• Identifying unusual operations is linked closely with assessing risk; factors include the nature of the transaction and any red flags associated with the parties involved.

Documentation for High-Risk Clients

• For medium or high-risk clients, obtaining supporting documentation about the lawful origin of funds is mandatory; this includes bank statements or other financial records.

Understanding the Legal Framework for Banking Funds

The Importance of Documenting Fund Origins

• The speaker emphasizes that no one would bank illicit funds due to the risk of exposure and tax implications, suggesting that once funds are banked, they have already passed through a filter.

• A scenario is presented where a bank transfer occurs without proper verification of fund origins, highlighting potential lapses in banking controls.

• The speaker argues that legitimate fund origins should be backed by professional documentation, specifically an accounting certification from a qualified accountant.

• An accounting certification serves as an annex when purchasing property, declaring that funds come from professional activities and must be verified against tax declarations.

• The importance of having certified documentation is reiterated; it provides assurance regarding the legitimacy of funds used for significant purchases like real estate.

Challenges with Alternative Documentation

• Relying on personal tax declarations instead of an accounting certification can lead to complications since individuals may lack the expertise to interpret such documents correctly.

• The necessity for an accounting certification is stressed again; it simplifies the process for those needing to justify their fund sources.

• Other parameters for validating fund origins include previous sales or donations but require substantial proof regarding the legitimacy of these transactions.

• Documentation supporting prior sales must be provided if funds originate from selling registered assets like vehicles or properties.

• Loans from banks are considered valid sources as banks are regulated entities; thus, they provide necessary documentation confirming the legality of funds received.

Addressing Private Loans and Donations

• Concerns arise over private loans and donations; while they explain why someone has money, they do not inherently prove the legal source of those funds.

• It’s crucial to request additional documentation proving the lawful origin of funds from donors or lenders rather than relying solely on donation instruments or loan agreements.

• The need for comprehensive checks on donor or lender backgrounds is emphasized to ensure all funding sources are legitimate and documented properly.

Regulatory Recommendations

• Regulatory bodies recommend public deeds for monetary donations despite them not being mandatory; this ensures better tracking and accountability regarding fund origins.

• Compliance requirements have shifted towards assessing client risk levels rather than just transaction amounts, necessitating thorough documentation based on client profiles.

Documentation of the Legal Origin of Funds

Understanding Documentation Requirements

• The documentation for the legal origin of funds is primarily dependent on the client's risk segmentation (medium or high), not on the transaction amount.

• In cases where clients convert pesos to dollars, additional documentation is required, such as proof of dollar acquisition in the market.

Financial Transactions and Compliance

• Large transactions may necessitate using MEP (Mercado Electrónico de Pagos) or CCL (Contado con Liquidación) methods to legally acquire dollars from pesos.

• Clients must justify their dollar purchases to tax authorities; otherwise, they risk complications if funds are withdrawn from fixed-term deposits.

Importance of Traceability in Transactions

• A key principle is that "what enters black leaves black," emphasizing the need for clear documentation when converting funds between currencies.

• Families often advise caution regarding financial decisions, especially concerning withdrawals and currency exchanges.

Risk Segmentation and Client Classification

• It's crucial to ensure that supporting documents match the currency used in transactions; discrepancies can lead to compliance issues.

• If a client sells a property in dollars and buys another in dollars, it’s essential to maintain traceability even if they are not identical funds.

Client Activity Monitoring

• Clients categorized as habitual engage in multiple specific activities within a 365-day period; this classification affects their risk assessment.

• Reclassification of clients based on activity frequency is permitted under regulations, allowing for ongoing monitoring.

Documentation for Legal Entities

• For legal entities, necessary documentation includes incorporation acts and updates on authority designations registered with relevant authorities.

• While balance sheets were previously mandatory, they are no longer required but should still be requested alongside final beneficiary declarations.

Identifying Beneficial Ownership

• It’s important to identify beneficial owners within corporate structures to prevent misuse as fronts for illicit activities.

Understanding the Role of Beneficiaries in Legal Structures

The Concept of Final Beneficiary

• The discussion revolves around identifying the final beneficiary, emphasizing that legal structures should align more with human beneficiaries than corporate entities.

• It is crucial to verify both the legal entity and its final beneficiary against terrorism financing regulations, ensuring all necessary controls are implemented.

Reporting Unusual Operations

• There is a distinction between reporting unusual operations to the Financial Intelligence Unit (FIU); while it’s not mandatory to present them, they must be available for review.

• A manual provided includes a model for recording unusual operations, detailing essential information such as date and type of operation.

Identifying Inconsistencies

• An example illustrates how an operation involving a significant amount from a low-income individual raises red flags due to inconsistencies in financial profiles.

• Documentation supporting the source of funds is critical; if claims about income sources cannot be substantiated, this could lead to further scrutiny.

Handling Suspicious Transactions

• If documentation fails to clarify an unusual transaction, it may need to be reported as suspicious. This serves as a self-regulatory measure for compliance.

• The importance of having proper declarations and evidence when claiming funds from family members or other sources is highlighted.

Consequences of Non-reporting

• Failing to report an unusual operation can have serious implications if later questioned by authorities; thus, maintaining accurate records is vital.

• The responsibility lies with individuals involved in transactions; if they do not report suspicious activities despite clear indicators, they risk potential legal consequences.

Summary on Compliance and Reporting Practices

• Maintaining a record of unusual operations aids in compliance and allows FIUs to focus on analyzing relevant data rather than monitoring every transaction closely.

Understanding Reporting Obligations in Financial Operations

Importance of Reporting Unusual Operations

• The necessity of documenting unusual operations in the internal register is emphasized, regardless of whether the operation or involved parties are later investigated by the Public Prosecutor's Office.

• Questions may arise regarding why certain transactions were not reported, particularly if they appear inconsistent with the economic profile of the individuals involved.

• Specific examples illustrate how financial discrepancies can trigger scrutiny, such as a monotributista making an unusually large purchase without proper reporting.

Consequences of Non-Compliance

• If neither the operation nor any parties are flagged for investigation, there may be no immediate consequences; however, compliance is crucial to avoid future issues.

• The process can seem bureaucratic and burdensome for clients but is necessary to mitigate risks associated with potential investigations.

• Advisors must prepare for worst-case scenarios to ensure all contingencies are covered, even if it feels excessive at times.

Internal Reporting Mechanisms

• The role of internal registers and reports submitted to regulatory bodies like UIF (Unidad de Información Financiera) is critical in maintaining compliance.

• Failure to advise clients properly on their obligations can lead to significant legal repercussions during audits or investigations.

Monthly Systematic Reports (RSM)

• Monthly systematic reports must be submitted between the 1st and 15th of each month following any activity period.

• Even months without reportable activities require submission of a "no movement" report to clarify that no transactions occurred rather than neglecting reporting duties.

Types of Reportable Transactions

• The RSM includes specific transaction types that need reporting, such as cash purchases exceeding 700 minimum vital salaries.

• These reports help maintain transparency and accountability within financial operations and prevent potential money laundering activities.

Compraventa y Reportes de Operaciones

Efectivo en Compraventas

• La operación de compraventa puede ser pagada en efectivo, lo que debe ser documentado claramente. Si se realizó un pago previo, debe constar en la escritura.

• Es esencial incluir detalles sobre el método de pago; si no se especifica, se asume que fue efectivo. Esto es relevante para los reportes mensuales.

Reporte Mensual y Anual

• Se incluyen las constituciones de fideicomisos y sociedades en el reporte sistemático mensual, sin importar el monto.

• Las compraventas superiores a 700 salarios mínimos vitales deben ser reportadas, especialmente aquellas relacionadas con inmuebles en zonas de seguridad y frontera.

Criptomonedas y Normativas

• Las operaciones con criptomonedas deben ser reportadas según la resolución 70 del 2011, aunque la resolución 242 del 2023 derogó ciertos artículos.

• El reporte sistemático mensual incluye operaciones con criptomonedas y requiere que todos los sujetos obligados cumplan con esta normativa.

Autoevaluación de Riesgos

• Se establece un nuevo informe anual que debe presentarse entre el 2 de enero y el 15 de marzo del año siguiente al informado.

• Este informe incluirá una autoevaluación del sistema de prevención por parte de cada sujeto obligado.

Revisión Externa e Independiente

• Los sujetos obligados deben contar con un revisor externo independiente para evaluar la suficiencia del sistema de control implementado.

What Can UIF Do Regarding External Reviewers?

Overview of UIF's Role and External Reviewers

• The UIF (Unidad de Información Financiera) can exclude external reviewers from its list for specific reasons, but it does not need to authorize their inclusion.

• Resolution 242 of 2023 allows notaries to have a shared independent external reviewer instead of each having one individually.

Responsibilities of Professional Colleges

• The professional college to which a notary belongs can conduct the external review, centralizing tasks and ensuring uniform standards across the same jurisdiction.

• Notaries must submit their self-assessment risk reports by April 30 annually, while the professional college will present its report by August 30.

Understanding Suspicious Activity Reports

Confidentiality and Reporting Procedures

• A suspicious activity report (SAR) is confidential; clients cannot be informed about such reports. It must be completed for any attempted or completed operation.

• To file an SAR, users must specify whether the operation was attempted or completed and identify any preceding crimes involved in money laundering.

Detailed Reporting Process

• Users are guided through a series of questions on the UIF website when reporting suspicious activities, including how they became aware of potential illicit activities.

• The information required for an SAR includes details about previous criminal acts that may relate to money laundering.

The Debate Around Professional Secrecy Exemptions

Scope of Professional Secrecy

• There is significant debate regarding the extent to which professional secrecy exempts individuals from reporting suspicious operations.

• If information leading to suspicion arises from actions protected under professional secrecy, individuals may be exempted from filing an SAR related to that operation.

Practical Examples and Clarifications

Legal Obligations in Reporting Suspicious Operations

Overview of Professional Secrecy and Reporting Requirements

• The defense attorney's role in cases preceding money laundering is protected by professional secrecy, but this does not exempt them from reporting suspicious operations.

• The timeframe for reporting a suspicious operation has changed; it must now be reported within 24 hours after concluding that it is reportable, with a maximum of 90 days from the act's formalization.

• Similar changes apply to reports concerning terrorism financing and proliferation of weapons of mass destruction, which also require reporting within 24 hours instead of the previous 48-hour window.

Challenges in Identifying Preceding Crimes

• Questions arise regarding how individuals can identify and report preceding crimes such as drug trafficking or human trafficking based on external information or news.

• To classify an operation as related to drug trafficking or tax evasion, there must be clear evidence such as an indictment or conviction; otherwise, assumptions cannot be made solely based on financial profiles.

• The classification process for reporting requires clarity on the specific crime being reported; ambiguity can lead to challenges in accurately framing the report.

Documentation and Retention Policies

• All documentation related to suspicious operations must be retained for ten years. For habitual clients, documents should be kept for ten years after they cease being clients.

• It is essential to maintain backups of all documentation both physically and digitally to ensure compliance with retention policies.

Conclusion and Next Steps