Compliance Department Report | FIU Resolution 76/2019
Dear Sir or Madam,
Argentina’s Financial Information Unit (FIU) issued a new regulation against money laundering and terrorism financing. It did so through Resolution 76/2019, published in the Official Gazette on July 29th, 2019. Such Resolution expands the definition of Reporting Entities and is aimed at companies operating credit and purchase cards, at traveler checks issuers, and includes companies operating E-wallets. The Resolution requires the implementation of a risk management system. The following are some of the relevant points for companies, which should adapt their policies.
New Reporting Entities
The Resolution defines companies operating credit and purchase cards as those that are issuers and also the following individuals, legal entities or legal structures: (a) those in charge of affiliating merchants or settling payments made through credit and purchase cards, (b) those that, in virtue of a contract with the purchaser, provide their “clients” services for processing payments through a platform or system.
To this effect, the Resolution also defines “clients”. Regarding issuers, “clients” are cardholder users, traveler checks holders, or affiliated merchants that accept or carry out operations with traveler checks. Regarding companies that provide services for processing payments through a platform or system, “clients” are the affiliated merchants.
Besides, the Resolution excludes certain companies: those operating SUBE (a card for transportation system), cards aimed only at acquiring goods to be consumed inside the issuing store or to load fuel and lubricants.
Risk-based management system
The system must be able to identify, assess, mitigate and monitor risks. This being the case, it must be based on a risk self-evaluation, with a methodology developed for that purpose. Such methodology must consider at least four risk factors: customers, products and services offered distribution channel and geographic zone. Results obtained must be included in a technical report and filed to the FIU. This self-evaluation must be repeated annually and the FIU may pose objections.
Once identified the risks, the Reporting Entity must establish mitigating mechanisms. For this purpose, it must prepare: (a) a statement regarding its risk tolerance and (b) policies to accept high-risk customers and the kind of customers that it will not do transactions with.
Specific policies and procedures
The system must contain a code of conduct, and policies and procedures, among others, aimed at (a) complying with the FIU’s anti-terrorism regulations, (b) accepting, identifying and knowing customers, (c) knowing owners or beneficial of final operations, (d) classifying customers according to their risk, (e) reporting suspicious activity. They must be approved by the administrative body or maximum authority of the Reporting Entity and followed by a training plan based on risks.
Role of the Compliance Officer and Prevention Committee
A Compliance Officer must be designated, according to conditions, functions, and responsibilities detailed in the Resolution. Also, a Prevention Committee to provide support, unless the Reporting Entity has no significant risks.
Assessing the System in two levels
The system must be assessed (a) every two years, by an external independent auditor and (b) by internal auditing, within the annual plan.
Resolution 76/2019 abrogates Resolution 2/2012. Even so, it establishes an implementation plan with deadlines: (a) as of December 31th, the methodology must have been developed, (b) as of March 31th, 2020, the technical report must be ready, (c) as of June 30th, 2020, policies and procedures must have been adjusted.
Other requirements that have not been differed will enter into force as of October 31th, 2019. Regarding procedures pending as of July 29th, 2019, Resolution 2/2012 will apply.
Through Resolution 76/2019, the FIU adapts local regulation to international requirements regarding anti-money laundering and terrorism financing.
Please, do not hesitate to contact us should you require any additional information on this matter.