Published legislation and draft legislation - Argentina

Role of the governing body in preventing money laundering and the financing of terrorism (AML/CFT)

Ruling 21/2018 of the Financial Information Unit

With Ruling 21/2018 by the Financial Information Unit (UIF), the Argentine government has modified the current legislation in the fight against money laundering and financing of terrorism (ALM/FT), in order to bring the regulations in line with international standards, best practices and guidelines currently in effect, in accordance with the recommendations made by the International Financial Action Group (IFAG).

The regulations are applicable to all entities operating on the capital markets and this modification also extends them to financial trusts with public offerings, their trustees, trustors and natural individuals and legal entities directly or indirectly related to them.

Responsibilities of the governing body

The ruling gives the governing body an essential role in AML/FT, as it is responsible for approving and periodically reviewing the risk prevention system, which must contain all the policies, procedures and controls to identify, assess, mitigate and monitor AML/FT risks. It will also approve the AML/FT Manual, which will contain these policies and procedures, and will be permanently updated.

This prevention system will be assessed periodically on two levels: first of all, an independent review by an external body with accredited experience in the matter; and secondly, a review by the entity’s internal control department. The results of the assessment will be reported to the governing body.

In undertaking its duties, this body must take into account the AML/CFT risks in the definition of business objectives and assume responsibility for studying and approving the technical report that includes the methodology used to identify and assess AML/CFT risks and the results of its implementation. This methodology must be reviewed annually (risk self-assessment) and sent to the FIU by April 30 each year.

It will designate a Compliance Officer for the entity and approve their work plan. The Officer shall be the party responsible for ensuring the implementation and monitoring of the procedures and obligations in AML/CFT matters and will liaise with the FIU.

Furthermore, it shall approve an annual training plan, with a view to instructing staff about the regulations in force in matters of AML/FT and about the policies and procedures implemented in the institution within the framework of the AML/FT system. This plan must be reviewed periodically and updated after assessing its effectiveness, so that whatever improvements may be considered relevant can be adopted.

Finally, it will study and approve the institution’s Code of Conduct, which shall be rolled out by the directors, managers and employees. This will contain the governing principles, values and policies that highlight the mandatory nature of the procedures that comprise the AML/CFT system and its proper implementation, along with the sanctions applicable in the event of failure to comply with the system.

Measures of due diligence

The Ruling also includes due diligence measures to enable institutions to access sufficient, timely and up-to-the-minute knowledge of all their customers, verify the information provided and monitor their operations properly.

To such end, entities shall segment their customers based on the AML/CFT risk classifications, as high, medium and low risk, so they can adopt simplified, continuous or reinforced measures of due diligence, as required.

The tasks of identifying and checking customers does not necessarily have to be conducted by the identified entities; they may be outsourced.

Application

Institutions must comply with the implementation plan set out in the Ruling, with the following deadlines:

  • At 30th September 2018, they shall have developed and documented the methodology for identifying and assessing risks
  • At 31st December 2018, they shall have the technical report reflecting the results of implementing the methodology and the risk assessment
  • At 31st March 2019, they shall have adjusted their policies and procedures, in accordance with the results of the risk self-assessment conducted