Obligations of Lawyers as Reporting Entities Now Regulated

Following the entry into force of Law 27739, which includes lawyers in the list of reporting entities, on March 25, 2023, the Financial Intelligence Unit (UIF) issued Resolution 48/2024, establishing obligations that lawyers must comply with to manage and mitigate the risks of money laundering, financing of terrorism, and financing of mass destruction weapons proliferation (ML/TF/PF), in accordance with the standards, good practices, guides, and international guidelines currently in force, pursuant to the Financial Action Task Force Recommendations.

The resolution establishes that lawyers will be considered reporting entities only when, on behalf of their clients, they prepare or carry out any of the Specific Activities detailed below, whether they do so independently or as partners or employees of a professional services firm (SO). The Resolution does not include neither in-house professionals employed by other types of businesses, nor professionals working for government agencies, which may already be subject to ML/TF/PF measures.

The specific activities ("Specific Activities") are:

• Purchasing and/or selling real estate, when the amount involved exceeds 700 minimum wages (SMVM).
• Administrating goods or other assets when the amount involved exceeds 150 SMVM.
• Administrating bank, savings, and/or securities accounts when the amount involved exceeds 50 SMVM.
• Organizing contributions for creating, operating, or managing legal entities or other legal structures.
• Creating, operating, or managing legal entities or other legal structures and the purchase and sale of legal businesses and/or shares of legal entities or other legal structures.

In such cases, SO must implement an ML/FT/FP Prevention System with a risk-based approach, including all policies, procedures, and controls to identify, evaluate, monitor, manage, and mitigate the ML/FT/FP risks to which they are exposed, among them:

1. Registering before the UIF as reporting entities.
2. Drafting a ML/FT/FT/FP Prevision Manual, which must be reviewed every two years.
3. Receiving annual training on ML/TF/PF prevention and on the policies, procedures, and controls of the ML/TF/PF Prevention System.

1. Preparing a Risk Self-Assessment Technical Report (“Technical Report”) including, at least, the following risk factors: client, offered services, distribution channels and geographic locations, information provided by the UIF or other authorities about ML/TF risks, and all situations that may affect the ML/TF risk. The Technical Report must be self-sufficient. It must be updated every two years and filed before the UIF before April 30.
2. Carrying out an Independent External Review every two years. The report issued within the framework of such review must be submitted before the UIF within 120 days as from the deadline to submit the Technical Report.
3. Submitting an Annual Systematic Report including general information (name, address, and activity), types and quantity of specific activities, and types and number of clients.
4. Segmenting clients according to the risk assigned to each one.
5. Carry out ongoing due diligence on regular clients and updating their identification files according to the risk level assigned to them. In this sense, regular customers are defined as those who carry out more than one Specified Activity within one year.
6. Detailing the information that, as a minimum, the Register of Unusual Operations and the Suspicious Transaction Reports must include.
7. Using red flags alert signals to determine whether a Suspicious Transaction Report should be filed, for example, when the amount, type, nature and frequency of the Specific Activities clients carry out are inconsistent with the clients' backgrounds and economic activity; when there is a sale of shares or assignment of units, or any other form of participation in companies within 10 business days as of the request for registration of the company, or before that date; or when the client tries to carry out transactions with counterfeit money, among others. Lawyers may not file such reports if they became acquainted with the relevant information in circumstances protected by attorney-client privilege.
    

The Resolution is in force as from March 26, 2024.  However, certain obligations will be required:

1. The first Risk Self-Assessment Technical Report and the assessment method used must be submitted by April 30, 2026.
2. The first independent external auditor's report must be submitted by August 31, 2026.
3. The first Monthly Systematic Report must be submitted between February 1 and 15, 2025.
4. The first Annual Systematic Report must be submitted between January 2 and March 15, 2025.