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Developments in the fight against money laundering

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Álvaro Martín analyses the latest developments in the fight against money laundering

On September 4, 2018 came into force the amendment of Law 10/2010 of April 28, Prevention of Money Laundering and Financing of Terrorism, operated by Royal Decree Law 11/2018 of August 31, to transpose into our legal system the Fourth Directive on Prevention of Money Laundering (EU) 2015/849.

In short, this reform, in a nod to the increasingly widespread culture of compliance, perfects internal procedures for the prevention of money laundering and terrorist financing, and tightens economic sanctions to be imposed in the case of serious and very serious offences.

To this end, the legislature has rearranged the internal control measures to be observed by a regulated entity into three separate articles, making the rule clearer. Thus, we now have a specific article to deal with the commonly called Manual for the Prevention of Money Laundering and Financing of Terrorism, in which, as a novelty, the paragraph that allowed the obligated subject to voluntarily submit the Manual to Sepblac is deleted, from which it can be concluded that, from now on, the Manual will have to be sent obligatorily. Likewise, it regulates in a separate article the figures of the Internal Control Body and the representative before Sepblac, requiring the latter to reside in Spain in order to be able to carry out this position.

However, the main novelty lies in the new article 26.bis which introduces the obligation to implement an internal communication channel for potential breaches of Law 10/2010, as well as the obligated subject's own internal policies or procedures. This measure, which is linked to the increasingly necessary compliance programs, makes it possible for this channel to be integrated into the compliance programs that the regulated entity has implemented or is going to implement. In addition, to encourage the use of this medium, the reform contemplates the possibility that communications may even be made anonymously and requires regulated entities to establish measures to avoid reprisals against the complainant.

The second major block of novelties is intended to facilitate compliance with due diligence measures and internal control procedures. To this end, the General Secretariat of the Treasury and International Financing is entrusted with publishing on its website the states, territories or jurisdictions that enjoy the status of equivalent third country, thus facilitating their identification by the regulated entities. Likewise, the definition of "Royal Holder" has been improved by incorporating new indicators so that regulated entities can adequately identify him, particularly when dealing with Anglo and German trusts.

The reform now stipulates that regulated entities must apply enhanced due diligence measures not only in cases in which they detect a high risk of money laundering, but also in cases in which they operate with countries that present strategic deficiencies in the fight against money laundering; and also extends the measures that a financial institution must apply in cases of cross-border banking correspondence, a concept that is defined for the first time in the Law. In line with the foregoing, the definition of "Persons with Public Liability" is revised, to whom reinforced due diligence measures will have to be applied regardless of whether they are nationals or foreigners. It also states that the documents accrediting compliance with capital prevention obligations will only be accessible to the internal control bodies of the regulated entity five years after the conclusion of the business relationship.

Apart from the improvement in internal control procedures, the third substantial modification is in sanctions, and so, in order to harmonise the maximum amount of economic sanctions applicable in the European Union, this is increased for serious and very serious infringements, while the remaining non-economic sanctions are maintained. These new sanctions reach amounts of up to 10 million euros or 10% of the annual turnover (compared to the previous 1.5 million or 5% of the net assets of the regulated entity) for the regulated entity, but in addition, the fine to be imposed on its administrators or directors is also increased, from 600,000 euros to 10 million euros.

The fourth - and in my opinion the last - great novelty is the obligation that all the obligated subjects who carry out any of the activities included in article 2.1.o of Law 10/2010 (among others, setting up companies, exercising the functions of management or of secretaries who are not directors of the board of directors, providing a registered office or a commercial address, postal address, etc.), register with the Mercantile Registry in order to obtain greater control over these services. Even non-compliance with this new obligation is punished as a minor infringement. In addition, these regulated entities must accompany the deposit of their annual accounts with a document containing, among other things, the type of services rendered, whether the borrower was a non-resident, the volume invoiced by them, the number of transactions carried out, etc.

Finally, the legislator instructs the Ministry of Justice, through the General Directorate of Registries and Notaries, to issue the resolutions it deems necessary to implement this last block of measures.

Although time will allow a better assessment, it can be concluded that the incorporation of the Fourth Directive on the Prevention of Money Laundering into our legal system brings improvements and will probably contribute to increasing the degree of compliance with the obligations established by Law 10/2010.


For further information, please contact:

Álvaro Martín

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