Financial Information Unit Updated Risk-based Supervisory Procedures and Regulated Obligation to Collaborate of Public Agencies

The Financial Information Unit (“UIF”) issued UIF Resolution No. 154/2018 (“Resolution 154”), approving the new consolidated text for risk-based supervisory procedures carried out by the UIF, as well as UIF Resolution No. 155/2018 (“Resolution 155” and together with Resolution 154, the “Resolutions”). These Resolutions regulate  the collaboration duties towards the UIF of the Argentine Securities and Exchange Commission (the “CNV” after its Spanish acronym), the Argentine Insurance Superintendence (the “SSN” after its Spanish acronym) and the Argentine Institute of Associations and Social Economy (the “INAES” and, together with the CNV and the SSN, the “Agencies”) for supervisory proceedings over the reporting entities under their respective oversight.
 

Resolution 154, which entered into force alongside its publication in the Official Gazette on December 28, 2018, abrogates all prior regulations set forth in Annexes II, II and IV of UIF Resolution No. 104/2010 (as amended), the regulations set forth in article 7 and Annexes V and VI of UIF Resolution No. 165/2011 and the regulations set forth in Annex III of UIF Resolution No. 229/2014. On the other hand, Resolution 155, published on the same date, abrogates Annex I of UIF Resolution No. 104/2010.
 

The Resolutions establish the framework for the implementation of a supervisory system in Anti-Money Laundering and Terrorism Financing (“AML/TF”) of reporting entities subject to oversight by the Agencies, on the basis of a risk-based approach in line with the Financial Action Task Force (“FATF”) standards and in accordance with the new parameters established with respect to financial and foreign exchange institutions by UIF Resolution No. 97/2018.
 

The Resolutions establish a Joint Taskforce consisting of public officials of the UIF and the CNV, the SSN and INAES, respectively, with the aim of coordinating the supervision and application of the regulations to reporting entities subject to the oversight of each Agency.
 

Likewise, the Resolutions require the Agencies to create: (i) a Risk Matrix for the supervision of reporting entities subject to the oversight with the aim of establishing such entities’ risk level; (ii) a Supervisory Manual for inspectors to carry out inspections under certain standardized parameters; and (iii) an Annual Supervisory Plan for supervised entities. All such documents will be subject to the prior approval of the UIF, which may introduce any amendments deemed necessary.
 

The text also establishes that any supervisory proceeding contemplated in the Annual Supervisory Plan, as well as those not contemplated therein but determined to be necessary, may be carried out by either the UIF and/or the Agencies, jointly or separately. The supervisory procedures may be carried out either in-situ or extra-situ. Once a supervisory procedure is finalized, the Agencies will be required to perform a Final Technical Report based on evidence and arguments with details of the supervisory proceeding and the conclusions thereof, which may be the basis for the implementation of Corrective Actions – in those cases in which the UIF understands that any breaches detected are not significant or systemic and do not carry any risk of affecting or risking the AML/TF system – or a Regularization Plan – in those cases where breaches found are more serious.
 

Corrective Actions and Regularization Plans may be materialized, among others, through: (i) the issuance of specific compliance orders with immediate or deferred effect, with set terms for their implementation; (ii) requests for periodical reports in regards to the advance of measures implemented by the obliged subject; and (iii) calling the compliance officer or other officers of the obliged subject to meetings, as well as the internal managers in charge of compliance.
 

Furthermore, Regularization Plans will set forth actions aimed to the regularization of breaches found in supervisory proceedings which may give place to the initiation of summary proceedings, setting a term for their compliance. The correct fulfilment of the plan may give place to the dismissal of any potential proceedings or the reduction of applicable sanctions in any ongoing proceedings. On the contrary, any breaches to the Regularization Plan may give rise to the initiation of summary proceedings by the UIF.
 

Lastly, Corrective Actions and Regularization Plans applied to reporting entities may be valued as antecedents in the event of repeated breaches.