Posted in Argentina

Argentina: Financial Information Unit creates Registry of Independent External Auditors of Money Laundering and Terrorism Financing Prevention

 This is a guest post of RCTZZ Abogados in Argentina.

Argentina’s Financial Information Unit (FIU), the governmental authority that enforces the law on prevention of money-laundering activities and terrorism financing has introduced a resolution stating that financial institutions (FIs) are obligated to review their systems with the goal of preventing money laundering and terrorism financing (AML/TF). Resolution Nr. 30-E/2017 (Res. 30) requires FIs as “obliged subjects” –ie, FIU’s reporting agents – to review their AML/TF systems at two levels, externally and internally.

The rule requires FIs to use an independent external auditor (IEA) with proven expertise in the prevention of money laundering and terrorism financing to issue a yearly report about the quality and effectiveness of their AML/TF measures. The report should include an assessment of the appropriateness of their underlying corporate governance rules.[1] Any areas, processes and other topics that the auditor finds ineffective should be identified in the report; the report should also introduce a plan to correct these flaws, with a detailed schedule.

To support the practical application of Res. 30, FIU issued Resolution 67-E/2017 (October 9, 2017) (Res. 67), creating the Registry of Independent External Auditors of AML/TF and setting out such auditors’ qualification requirements, factors incompatible with serving as an AML/TF auditor, the registration process, the contents of their reports and a disciplinary regime. The Registry shall be open to public access.

Qualification requirements to become an IEA are a university degree, a sound background in AML/TF issues and at least five years of professional experience related to AML/TF.

Incompatibiltiy factors may include being:

  1. a partner, shareholders, director or member of the supervisory committee or syndic of the obliged subject that hired the IEA or of persons or entities economically related thereto
  2. a spouse or relative of the controlling partner or shareholder of the obliged subject, having decision power over it or over a member of the board of directors or the supervisory committee or syndic of the obliged subject that hired the IEA (incompatibility includes next of kin by blood and affinity to the third degree)
  3. an employee of the obliged subject that hired an IEA or of entities of the same economic group
  4. An external auditor and/or partner of the external auditor’s firm of the obliged subject at the same time[2] (this impediment extends to the economic group)
  5. a borrower and/or a creditor of the obliged subject in an amount that may affect the independence of its duties and
  6. other conflicts of interests of a personal, labor, economic or financial nature that may affect the IEA’s independence.

Obtaining approval for an IEA

An obliged subject seeking to fulfill its obligation should request the registration of one or more IEAs in the Registry by e-filing several pieces of information and documents about the IEA????. The obliged subject must preserve a record of the IEA with all this information available for the FIU for five years. The IEA may practice only after the corresponding validation of its record in the Registry is issued.

Contents of the report

The IEA audit or review report shall describe in detail the internal control measures in place, assess its operative efficacy and, if applicable, propose possible corrections or improvements. The IEA’s report is not a financial statement’s audit report.

The report shall be confidential. It shall include at least some of the following information:

  • The term of review (which may not be longer than one year vis-à-vis the previous term) that need not coincide with the FI’s fiscal year closing date
  • The scope of works (risk management assessment, corporate governance and internal policies and rules, KYC  policy compliance, monitoring and reporting systems, clients’ record keeping, regulatory compliance, training plan and internal controls on AML/TF)
  • An opinion about the quality and effectiveness of the AML/TF System and
  • The findings, suggested measures and proposed schedule of compliance.

Annual reporting deadline

By September 15 every year, the IEA should inform the FIU of the results of its reports. FIU may request the IEA’s reports and working papers.

Penalties in case of infringements

In case of infringements of Res. 67, IEAs may be subject to warnings, suspension from the Registry (for a period ranging from six months to two years), exclusion from the Registry (for up to five years).

Things to come

Res. 67 enters force on December 31, 2017.

It is worth noting that the FIU is in the process of drafting new resolutions adopting the risk-based approach standard for each obliged subject[3]; so far, the first such resolution covers FIs.[4]

We should expect intense activity on this matter from the FIU in the coming months. Res. 67 will certainly attract AML/TF professional firms eager to provide independent external review or audit services and become leaders in this market.

* * * * *

Hernán D. Camarero, Partner in Richards, Cardinal, Tützer, Zabala & Zaefferer’s Corporate/M&A, Banking and Finance and FX Controls practices.

Please do not hesitate to contact the author at Richards, Cardinal, Tutzer, Zabala & Zaefferer s.c. –Abogados-, an independent law firm in Argentina, www.rctzz.com.ar for further information at camarero@rctzz.com.ar.

[1]               § 19, Par. a), AML Act.

[2]               This cause shall be enforceable while the Central Bank of Argentina’s rules mandate FIs’ external auditors to issue a report on AML/TF within the framework of their external audits.

[3]               Such as inter alia money remittances companies, gambling companies, stock broker-dealers, investment funds managing companies, marchands, insurance companies, credit card companies, Argentine Securities and Exchange Commission, valuables transportation companies, couriers, insurance agents, accountants, realtors, car manufacturers and car dealers, and trustees.

[4]               Please see our article published at https://www.latamlawblog.com/2017/07/argentina-financial-information-units-new-aml-regulations-for-financial-institutions/.

 

Posted in chile Financial Services Fintech Regulatory Technology

Blockchain y Criptomonedas, Contratos Inteligentes, tecnologías en la mira de la regulación

Hace ya algún tiempo que Bitcoin se encuentra en la mira de las autoridades nacionales e internacionales, quienes han discutido acerca de la necesidad de su regulación; sin embargo, este interés se ha exacerbado más ahora que su valor ha alcanzado máximos históricos y ha superado los US$ 7.000 en las últimas semanas.

Las criptomonedas o criptodivisas, dentro de las cuales encontramos Bitcoin, son monedas digitales, de código abierto, que basan su funcionamiento en un protocolo P2P (puerto a puerto) completamente descentralizado, esto es, que no dependen ni están respaldadas por autoridades centrales, terceras partes, o mercados internacionales.

Si bien han levantado sospechas en cuanto a su legitimidad, la utilidad de las criptomonedas no ha sido puesta en discusión. Entre otras ventajas, las criptomonedas –a diferencia del dinero digital como las tarjetas de crédito- eliminan la intermediación, reduciendo drásticamente los costos de transacción y las demoras en el pago efectivo.

No obstante el atractivo de las criptomonedas, los expertos advierten que debe prestarse mayor atención al Blockchain – la tecnología subyacente o de soporte de la Bitcoin. En términos simples, el Blockchain – o cadena de bloques- es una base de datos distribuida, que registra bloques de información y los enlaza, permitiendo: (i) la recuperación de la información y (ii) la verificación de que ésta no ha sido cambiada.

Las principales características de Blockchain son (i) la descentralización, esto es, que no depende de instrucciones de terceras partes para ejecutarse; y (ii) la seguridad de los datos encriptados, consensuando la información entre los distintos nodos -servidores que reciben, almacenan y envían los datos-  que conforman esta red, que es por tanto difícil y costosa de alterar.

Dentro de las funciones más interesantes del Blockchain para la industria legal, está la posibilidad de implementar “Contratos Inteligentes”, o acuerdos entre partes que se ejecutan automática y directamente sobre activos, a medida que se verifican las condiciones pre acordadas, objetivas y no dependientes de valoración humana. Desde el punto de vista del Derecho, la implementación de los llamados Contratos Inteligentes podría dar lugar a una teoría sobre la formación y ejecución contractual de una manera completamente distinta a la tradición jurídica contemporánea, eliminando toda intervención humana en el proceso de ejecución.

Esta tecnología revolucionaria plantea grandes desafíos legales, derivados principalmente de su descentralización, en contraposición al criterio territorial de la ley hasta ahora; ¿Qué jurisdicción y leyes son aplicables a un sistema que no está “almacenado” en ningún lugar, o incluso en varios a la vez? Y derivado de esto mismo, ¿de qué forma puede hacerse exigible una transacción no autoejecutable realizada a través del Blockchain? ¿De qué forma y ante quién puede solicitarse la de nulidad de un contrato o cláusula programada sobre este sistema? ¿Cómo tributan las criptomonedas, u otras transacciones sobre Blockchain? ¿Qué implicancia sobre la privacidad de los ciudadanos tiene existencia de una base de datos que no puede ser borrada? ¿Qué nuevos desafíos se presentan en cuanto a la ciberseguridad? Nuestro ordenamiento, basado en los sistemas de confianza centralizados por ministros de fe, en general dependientes de organismos públicos, podría alterarse radicalmente con Blockchain, que podría sustituir a Notarios, Conservadores y Archiveros.

Finalmente, el enfoque a nivel comparado en esta materia ha sido dispar. A principios de noviembre el Banco Central de Australia sostuvo que aún no valía la pena regular esta materia. Las autoridades tributarias y financieras, en cambio, ya han esbozado algunos intentos normativos; en Ucrania, por ejemplo, se está estudiando un proyecto legislativo relativo la tributación de operaciones con criptoactivos; en Rusia, se está investigando la regulación para la adopción de esta tecnología en los mercados financieros; tanto Singapur como China están efectuando pruebas con Blockchain para transacciones interbancarias. En Chile, por su parte, una serie de emprendimientos, tanto de entidades públicas y privadas, buscan aprovechar la tecnología Blockchain y las ventajas de las criptomonedas.

 

For more information, please contact:

Felipe Bahamondez fbahamondez@bazdlapiper.com

Paula Droguett pdroguett@bazdlapiper.com

Paulina Farias pfarias@bazdlapiper.com

Posted in Brazil Financial Services Governance Insurance Pension Plan Regulatory Reinsurance

Brazil: New Insurance Rules – Retrocession and new resolutions for pension plans

Retrocession

This new regulation restricts private pension plans, and insurance cooperatives, microinsurers and insurance companies operating only with DPVAT (mandatory auto insurance for personal damages caused by vehicles) to accept risks in retrocession¹.

Pursuant to this new rule, retrocession with insurers placed in Brazil or abroad can be placed directly with the insurer or intermediated by reinsurance brokers, provided that the insurer operates in the line of business which is being retroceded.

Insurers can accept in retrocession business from reinsurers based abroad, registered or not by SUSEP. Such placements may be intermediated by foreign reinsurance brokers not registered with SUSEP. However, insurers cannot accept retrocession business from foreign insurers, registered or not with SUSEP.

(Portuguese language is below) Continue Reading

Posted in Argentina Real Estate

Argentina: Restrictions On ownership of Rural Land by Foreigners

Argentina’s Act 26,737, enacted in 2011, restricts foreign ownership of rural real estate. The restrictions imposed by Act 26,737 are relevant for any project that involves acquisition of rural land in Argentina .

The Act imposes several limitations. Under the Act and its applicable amendments, foreign ownership is defined as any acquisition, transfer of ownership or possession rights, whatever the type or name granted by the parties or duration of the same, in favor of a series of points, set forth below. Continue Reading

Posted in Arbitration Brazil Colombia Foreign Arbitral Award ICSID International Arbitration Mexico UNCITRAL

Enforcement of Foreign Arbitral Awards in Key Latin America Jurisdictions

Published in the Global Arbitration Review, the chapter on the Enforcement of Foreign Arbitration Awards in Key Latin America Jurisdictions summarizes the arbitration law and practice of certain jurisdictions that have experienced an important development in the past 20 years in their arbitration landscape; they are also countries with significant economic growth. The countries in question are Brazil, Colombia, Mexico and Peru. This chapter focuses on the legislative efforts and the attitude adopted by the courts in these countries in regards to the recognition and enforcements of foreign arbitral awards. For full text, please click here. Continue Reading

Posted in International Trade Mexico NAFTA Trade USTR

Official Start of NAFTA Renegotiation: The renegotiation will set the tone for the administration’s trade policy

The first round of renegotiating the North American Free Trade Agreement (NAFTA) will take place August 16 – 20 in Washington. The United States Trade Representative (USTR) will host a press conference to begin negotiations and will report out daily to the Industry Trade Advisory Committees (ITAC). The mechanics of the rest of the first round remain fluid – some working groups may table proposed text and engage throughout the week, while others may meet only briefly to establish a scope of work. The second round of talks is tentatively scheduled for September 10 in Mexico City. Continue Reading

Posted in Brazil Incentives Tax VAT

Convention for the Avoidance of Double Taxation between Brazil and Russia || Convenção para Evitar a Dupla Tributação entre Brasil e Rússia

On August 1st, 2017, it was published the Executive Decree no. 9,115/2017, which internalized the Convention for the Avoidance of Double Taxation between Brazil and Russia (“Brazil-Russia Treaty” or “Convention”), signed in Brasilia on November 22nd, 2004. We have focused on the most relevant points, considering most usual queries of taxpayers.

According to article 2 of the Convention, the rules to avoid double taxation shall apply to the Brazilian income  tax of individuals and corporations and the Russian tax on profits of organizations and Russian income tax on individuals. There is no mention regarding Brazilian Social Contribution on Net Profits (CSLL), but it can be interpreted that the aforementioned contribution is covered by the Brazil-Russia Treaty by virtue of section 11 of Law no. 13,202/2015.

(Portuguese language full content below) Continue Reading

Posted in Venezuela

Looming Crisis in Venezuela

Authored by The Cohen Group

  • On July 26, the Department of Treasury’s Office of Foreign Assets Control (OFAC) designated 13 current and former Venezuelan government officials, including: Elias Jaua, former foreign minister; Tibisay Lucena, president of the National Electoral Council; and Simon Zerpa, vice president of finance of state oil producer PDVSA. The sanctions are part of increased pressure by the United States to stop the Venezuelan government from holding elections on July 30 for a “constituent assembly” that would re-write the country’s constitution. We expect the Venezuelan government will move forward with the vote, prompting the United States to escalate with possible sectoral sanctions.

More implications of the current crisis, please read below. Continue Reading

Posted in AML chile Financial Services

EL BANCO CENTRAL DE CHILE PUBLICA SU NUEVA NORMATIVA SOBRE EMISIÓN Y OPERACIÓN DE TARJETAS DE PAGO CON PROVISIÓN DE FONDOS

Below is an update from Chile on the new provisions concerning fund processing.

La Ley N° 20.950, que autoriza la emisión de tarjetas de pago con provisión de fondos (prepago) por entidades no bancarias, encomendó al Banco Central de Chile, el adelante el “BCCh” el establecimiento de normas aplicables a las empresas que emitan y operen estas tarjetas.

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