Puerto Rico’s AML/CTF supervisors
Puerto Rico is an unincorporated territory part of the United States. As a result, Puerto Rico is subject to many U.S. federal laws, and the U.S. oversees anti-money laundering (AML) activities in Puerto Rico.
The major AML/CTF regulatory body in the United States and Puerto Rico is the Financial Crimes Enforcement Network (FinCEN). By gathering, analysing, and disseminating financial intelligence and strategically using financial authorities, FinCEN aims to protect the financial system from unlawful use, prevent money laundering, and advance national security. To fulfil its objective, FinCEN collects, maintains, and distributes data on financial transactions, analyses and disseminates data for law enforcement purposes, and develops international partnerships with organisations in other nations as well as international entities.
How to comply with AML/CTF regulations in Puerto Rico?
As previously stated, Puerto Rico is subject to federal laws of the United States. The two primary AML regulations are the Bank Secrecy Act and the Patriot Act.
The Bank Secrecy Act (BSA) is the first and most comprehensive federal law aimed at preventing the financing of terrorists and money laundering. The BSA permits the Secretary of the Treasury to enact regulations requiring banks and other financial institutions to implement measures to prevent financial crime, such as the creation of AML programmes with the proper customer due diligence (CDD), screening procedures, and report-filing and record-keeping requirements. In criminal, tax, and regulatory investigations and prosecutions, as well as in some intelligence and counter terrorism cases, these measures have shown to be quite helpful.
The USA PATRIOT Act, which stands for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism, was enacted in 2001 in response to the terrorist attacks on September 11. The USA PATRIOT Act aims to prevent and penalise acts of terrorism both domestically and abroad and to improve the investigative capabilities of law enforcement. This Act broadens the use of BSA and grants the following extra monitoring authority to law enforcement:
Enables law enforcement to employ extra surveillance against terrorism-related offences
Enables federal authorities to pursue highly skilled terrorists who have been taught to avoid detection
Permits federal authorities to request a court order to access corporate records in circumstances involving national security or terrorism
Allows federal organisations to share information and work together so they can assemble the pieces
The Patriot Act amended the legislation to account for new threats and technological advancements and toughened the punishments for terrorism offences.
How do you comply with the BSA and USA Patriot Act?
In accordance with the BSA and related anti-money laundering regulations, banks are required to:
Create efficient BSA compliance systems that should include internal controls to ensure continuing compliance, independent testing for compliance, designating a person in charge of organising and overseeing daily compliance, and providing training for the necessary staff.
Set up efficient monitoring and customer due diligence mechanisms
Check for matches with other government listings and the Office of Foreign Assets Control (OFAC)
Create a method for monitoring and reporting questionable activity that works well
Check for matches with other government listings and the Office of Foreign Assets Control (OFAC)
Create anti-money laundering programmes that are risk-based
Create programmes for customer due diligence (CDD)
Create a programme for customer identification (CIP)
Keep a record of any cash payments you make for movable property
Report cash transactions that total more than $10,000 per day
Report any unusual behaviour that might be a hint of crime (e.g., money laundering, tax evasion)
What are my AML/CTF reporting obligations?
Banks are required to issue currency transaction reports (CTR) and report cash transactions above $10,000 made over a single business day, whether they took place in a single transaction or over the course of several. It is designated as FinCEN Form 112 and submitted electronically to the Financial Crimes Enforcement Network (FinCEN) (formerly Form 104). For technical filing purposes, the CTR has some fields that are considered as "critical." This means that filings with these fields left empty will not be accepted by the BSA E-Filing System. Regardless of whether the specific fields are judged crucial for technical filing purposes, FinCEN anticipates that banks will give the most thorough filing information possible, keeping with current regulatory requirements. The bank shall take any necessary actions that FinCEN specifies in the correspondence if the bank receives correspondence from FinCEN identifying data quality problems. Within 15 days of the transaction date, a finished CTR must be electronically submitted to FinCEN. CTR copies must be kept on file by the bank for 5 years after the report's due date. Both physical copies and electronic copies must be kept by the bank.
Banks are required to issue report of suspicious activity (SAR). A suspicious activity report (SAR) must be filed for any cash transaction in which the client appears to be attempting to circumvent BSA reporting requirements by failing to submit a CTR or monetary instrument record (MIL). Additionally, a SAR must be submitted if the customer's activities imply that they are engaging in money laundering, breaking other federal criminal laws, or perpetrating check fraud, wire transfer fraud, or enigmatic disappearances. These reports, designated as Treasury Department Form 90-22.47 and OCC Form 8010-9, 8010-1, are submitted to FinCEN. A financial institution is obligated to submit a suspicious activity report no later than 30 days following the date that information that could serve as the basis for submitting a report were first discovered. A financial institution may wait an extra 30 calendar days before filing a suspicious activity report if no suspect was found on the day the incident was discovered. No reportable transaction may ever be hidden for longer than 60 calendar days after it was first discovered. A financial institution is not permitted to let a customer or business know that a SAR has been filed, and all reports required by the BSA are exempt from the FOIA's disclosure requirements.
MSBs that offer travellers' checks or money orders are required to record cash acquisitions totalling $3,000 to $10,000, inclusive. If more than one cash purchase of a financial instrument totals $3,000 or more and is made concurrently or the MSB has knowledge that the transaction took place within a business day, the transaction must be reported.
No matter the manner of payment, MSBs who offer money transfer services are required to gather and record information for each money transfer of $3,000 or more. MSBs are required to preserve the record for 5 years following the transaction date.
Exchangers of foreign or domestic currency are required to retain records of all transactions totalling more than $1,000 for a period of 5 years after the transaction.
