On December 28, 2018, the Financial Information Unit's ("UIF") Resolutions No. 154/2018, 155/2018 and 156/2018 were published in the Official Gazette. Notwithstanding the approval of "UIF's Supervisory procedure based on risks", which shall apply to control procedures initiated after the effective date thereof, and the incorporation of the "Regulation of the National Securities Commission's (Comisión Nacional de Valores) collaboration duty for the supervisory procedures of the reporting parties under its comptroller", the "Regulation of Superintendencia de Seguros de la Nación´s collaboration duty for the supervision procedures of the reporting parties under its comptroller" and "Rules of National
Associativism and Social Economy Institution's (Instituto Nacional de Asociativismo y Economía Social) duty of collaboration for supervision of regulated entities under its comptroller" reflected under Resolution No. 155/2018, the amendments introduced by Resolution No. 154/2018 to Resolutions UIF No. 70/2011 , UIF No. 67/2017, UIF No. 30/2017, UIF No. 21/2018, UIF No. 28/2018 and UIF No.
50/2011 are of special interest.
Resolution No. 156/2018 (the "Resolution"), to which we will refer in detail in this review, intends to update the applicable rules to reporting parties to adapt the regulation, obligations and procedures to the international standards of the Financial Action Task Force ("FATF") on Money Laundering and Terrorist Financing ("ML/TF"). In this regard, the FATF recommends applying a risk-based approach, so that measures to prevent ML/TF crimes are proportional to the risk of such crimes occurring.
In such regard, the Resolution included several adjustments under a set of former UIF Resolutions which could be summarized in the following points:
1. In connection to UIF Resolution No. 70/2011, requirement of a sworn statement regarding the prevention of ML/TF is deleted when the reporting party operates with Clients that meet the status of "reporting parties". Such change is due to difficulty of implementing such formality and given that contractual relationships to be established must contemplate a risk-based approach.
2. In relation to UIF Resolution No. 67/2017, requirements to be fulfilled by external reviewers when communicating the results of their evaluations over third-parties to UIF, are modified. Following the Resolution, external reviewers will comply with their duty of information by filling a form to be developed by UIF for such purpose, which means that such duty will not be fulfilled directly from UIF's website anymore. Moreover, such form shall be filed through the website under special time limits to be established to each industry, being removed the general time limit of September 15th of each year.
3. Regarding the Resolution 21/2018 (applicable to reporting entities of Capital Markets):
a. Reporting
parties are modified, incorporating those agents which act on the placement of Common Investment Funds, to the Collective Financing Platforms and to the Global Investment Advisers. Moreover, the subcategory of "Participante Directo" is removed from the definition of "Agente de Liquidación y Compensación".
b. Human persons, legal entities and legal structures without legal personality with respect to which the Agent is in charge of the advice regarding investments in the capital market, management of operations orders and/or management of investment portfolios, are incorporated as Clients of the Global Investment Advisory Agents.
c. New reporting
parties
will have a maximum term of 120 calendar days to comply with the implementation plan from Section 41 of Resolution 21/2018.
d.The implementation plan includes (i) development and documentation of a risk identification/assessment methodology; (ii) seek of a technical report that reflects the results of the implementation of said methodology; (iii) implementation and adjustment of its policies and procedures regarding the prevention of money laundering and terrorist financing (which should be contained in the ML/TF Prevention Manual) and (iv) issuance of an annual report stating the quality and effectiveness of its ML/FT Prevention System by the external reviewer, communicating the results electronically to UIF (as established in Section 19.a of Resolution 21/2018).
e. Duty to have policies and procedures to determine when to execute, reject or suspend an international transfer of negotiable securities when it lacks the information on the identification of the payer and/or the beneficiary, as well as the appropriate follow-up action is incorporated.
f. Terms of document conservation established under section 17 of UIF Resolution No. 21/2018 are modified, being extended in all cases to 10 years.
g. Under section 29 of UIF Resolution No. 21/2018 the possibility of applying Simplified Due Diligence measures set out in such section, with respect to committed contributions within the framework of collective financing systems, when the involved amount does not exceed the amount of PESOS FORTY THOUSAND (ARS 40,000) is incorporated.
h. The Agentes de Negociacion are enabled to carry out the Risk Self-Assessment and independent external review every 2 years.
4. Regarding Resolution 30/2017 (applicable to financial entities subject to Law No. 21,526):
a. Term for communicating the Compliance Officer removal is modified to FIVE (5) business days.
b. Section 15 incorporates local and foreign subsidiaries. Possibility of delegating operative issues of Continuous Due Diligence is clarified, provided that it does not include the determination of the opportunity in which this should be done and the control of the result of such tasks, the monitoring and analysis of transactional alerts, and the Management of Suspicious Operations Reports and their related files.
c. Duty to keep documentation by magnetic means is incorporated. Besides, the possibility to share Clients' files within the economic group is expressly incorporated, together with the Client's power to require the reporting entity to share all the information and documentation contained in his file regarding their identification and the origin and legality of the funds, pursuant to provisions of subsection c) of section 21 of Law No. 25,246.
e. Section 44 is modified, clarifying that both independent external review and self-assessment from section 4 may be done every two years (replacing the wording "shall" to "may"). Moreover, thresholds from which the due diligence measures should be intensified are increased.
5. In relation to Resolution 28/2018 (applicable to insurer sector):
a. Risk Self-Assessment date of filing is being modified from October 30th to May 31st of each year, and stating that in those cases in which the reporting entity performs more than one regulated activity, it must develop the risk assessment for each one of them.
b. When the reporting entity has operations abroad, it must apply the principle of higher rigor (between Argentine and foreign regulations), to the extent permitted by the laws and regulations of the foreign jurisdiction.
c. Compliance with the UIF Resolution is differentiated in terms of politically exposed persons, in cases of compulsory insurance, at the time of payment of the claim and the possibility of deferring, in low-risk clients, compliance with the UIF Resolution in matters of politically exposed persons at the time of payment of the loss.
6. The duty to carry out the ML/TF Prevention System evaluation with respect to the independent external reviewer's report for the year 2018 shall be deemed fulfilled if sent before November 15 of the current year. Likewise, the reporting obligation of the Agentes de Liquidacion y Compensacion and Agentes de Negociacion may be completed until March 15, 2019, with respect to September, October, November and December 2018, and those corresponding to January and February 2019.
7. Reporting parties included under Resolutions UIF No. 30/2017, UIF No. 21/2018 and UIF No. 28/2018, shall establish a digitalization chronogram of the pre-existent clients´ files, considering the risk that such files present. Said schedule must be available if required within the framework of supervision. The maximum term of the digitization tasks of the aforementioned files shall not exceed the time established in each resolution for their update, depending on the risk assigned by the obligated party.
8. Resolution 50/2011 expressly obliges to keep the contact information updated of the reporting entities and compliance officers (notifying any changes within 60 calendar days from produced). Moreover, it is also mandatory to inform the Compliance Officer replacement within 5 days from such change, informing the reasons for such replacement and the term during which the position will be performed. Failure to comply with the article may result in the application of sanctions.
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