Next week, on the 18th of September, the new rules on for money laundering and terrorism financing prevention will come into force (Law 83/2017, of august 18th).
In general, the main innovations in L83/2017, in comparison with the rules set out in the provisions which it will replace, are the following:
- Larger cast of encompassed entities, with an emphasis on the real estate sector, where real estate development activities and leasing activities become explicitly covered;
- Broadening of money laundering and terrorism financing measures;
- Greater detail in the description of the different duties set out as well as of the procedures required to comply with them.
The new money laundering and terrorism financing prevention are based in the promotion of transparency and the recording and reporting of information, particularly furthering the identification and verification duty, along with the reporting and record-keeping duties. The accent in transparency is consistent with the establishes the Ultimate Beneficial Owner Central Registry, which we reviewed here.
To that end, the duty to define, document and keep records of the policies and procedures adopted is now applicable to all encompassed entities, with the law providing a minimum set of aspects which must be foreseen in said policies and procedures.
The documentation supporting said policies and procedures should substantiate the measures employed to comply with the cast of duties set-out in L83/2017, which remains similar to the one it now replaces, and represents an important asset should an encompassed entity be subject to a money laundering and terrorism financing prevention procedures audit, or to investigative procedures by the relevant authorities.
This duty is complemented by a further development of the tasks and responsibilities of the management body regarding policies and procedures to which Law 83/2017 assigns responsibility for the application of those measures and procedures, as well as for its adoption, implementation, promotion, monitoring and periodic evaluation.
Entities are also forced to appoint a person responsible for compliance regarding money laundering and terrorism financing prevention, when appropriate regarding the nature, dimension and complexity of the activity pursued or followed or required by the relevant oversight authority.
The new regime further establishes the obligation to monitor, namely through the digital subscription of any relevant content which are available, even when in a foreign language, and fully understand the restrictive measures adopted by the United Nations Security Council and by the European Union on freezing assets and economic resources related to terrorism, proliferation of weapons of mass destruction, and its financing, against named persons or entities.
Concerning the duties to be implemented and complied with by the encompassed entities, Law 83/2017 provides for the reinforcement of a cast similar to that which it replaces. We highlight the duties of identification, communication and conservation as the most relevant for their practical impact on the development of the encompassed entities' activity.
Law 83/2017 foresees the identification and diligence duty with more extensive a cast of elements concerning customers that must be collected and known by the encompassed entities' employees. With regard to procedure, we highlight the requirement to provide, from 1 January 2019, technological means and services that allow the reading of the Cartão de Cidadão (Identification card) or Chave Móvel Digital (Digital Mobile Key), the use of which may be requested by customers.
With regard to the monitoring of transactions, the rule of identification and due diligence - previously set out for occasional transactions for an amount equal to or exceeding EUR 15,000.00, regardless of the number of operations performed, now contemplates the transfers of funds in any amount over EUR 1,000.00.
The rule of identification and due diligence - previously established for occasional transactions in an amount equal or exceeding EUR 15,000.00, regardless of the number of operations performed - now contemplates the transfer of funds over EUR 1,000.00 in what concerns the monitoring of transactions.
The notice further provides the obligation to create a specific channel, independent and anonymous, which allows employees to communicate possible breaches and risk situations. The content of the communications to be provided to authorities, previously generally described in the previous regime, is substantiated through a list of minimum elements to be contained in said communications.
The conservation duty likewise now foresees a more detailed description of its compliance measures and is broadened, establishing the duty to preserve all documentation included in the client's files or processes, namely any comercial correspondence sent as well as any documents, records and analysis which demonstrate compliance with the duties set out in L83/2017.
Regarding penalties, criminal offences are defined for the illegitimate disclosure of information, unveiling and facilitating the unveiling of identity, punishable with prison sentences or fines. Overall, the breach or infringement of the imposed rules is sanctioned with administrative offences punishable with fines up to EUR 5,000,000.00, for legal entities, a limit twice higher than the one previously in place. These limits may further amount up to the entire sum of the obtained benefit or, for certain entities, to the equivalent to 10% of the total annual turnover.