From FIU Resolution No. 111/2012 to FIU Resolution No. 90/2024: Strengthening the Preventive System against Money Laundering, Terrorist Financing and Proliferation of Weapons of Mass Destruction Financing (AML/CTF/CPF)

By Miguel Cassagne

Owner of CASSAGNE Consultores

07/11/2024

Introduction

The fight against money laundering and terrorist financing and (AML/CFT) has been a priority for Argentina, with the Financial Information Unit (FIU) playing a crucial role in this effort. The recent FIU Resolution 90/2024, which repeals the previous FIU Resolution 111/2012, marks an important milestone in the evolution of the national regulatory framework.

This article aims to analyze the changes introduced by the new resolution and evaluate its impact on strengthening the AML/CFT preventive system in the country.

Chapter 1: Context and Legal Framework.

1.1. Law No. 25.246 and Its Evolution.

Law No. 25.246, enacted in 2000, establishes the foundations for the prevention and suppression of money laundering in Argentina. Over the years, this law has been modified and complemented by various FIU resolutions, adapting to international standards and the recommendations of the Financial Action Task Force (FATF).

This law created the Financial Information Unit as the body responsible for receiving, analyzing, and transmitting information to prevent and detect money laundering and terrorist financing operations.

To this end, it empowered the UIF to regulate the obligations that must be fulfilled by obliged subjects in AML/CFT matters, establish the parameters to supervise them in the fulfillment of their obligations, and establish mechanisms and procedures to apply the Sanctioning Regime in case of non-compliance.

1.2. FIU Resolution 111/2012: A Significant First Step.

In this sense, and for the purpose of regulating the sanctioning system and guaranteeing the due defense of the obligated subjects involved in summary proceedings, FIU Resolution 111/2012 represented an important advance in the regulation of the summary procedure for the application of sanctions.

This resolution established the basis for an administrative process that guaranteed due process and proportionality in the application of sanctions to obligated subjects for more than 12 years.

Among its key points were the definition of the stages of the administrative summary, the deadlines for presenting defenses, and the criteria for the graduation of sanctions. However, over time, the need to update and improve this regulatory framework to adapt to new challenges and demands of the national and international context became evident.

1.3. Need for New Regulation.

With the advancement of technologies and the increasing complexity of financial operations, regulations must evolve to remain effective. In this sense, FIU Resolution 111/2012, although fundamental at the time, presented certain limitations and areas for improvement. The need for greater speed, efficiency, and adaptation to international standards led to the development of FIU Resolution 90/2024.

This new resolution aims not only to address the deficiencies of the previous regulation but also to incorporate accumulated experience and international best practices in the matter.

Chapter 2: Changes Introduced by FIU Resolution 90/2024.

2.1. Summary Procedure and Weighting Factors.

One of the most significant changes in the new resolution is the introduction of an updated regulation of the summary procedure. This new regulation incorporates a series of weighting factors to be considered when initiating a summary, such as the nature and risk of the non-compliance, the organizational size of the obligated subject, and the case's background and behaviors.

These factors allow for a more detailed and fair evaluation of each situation, ensuring that sanctions are proportional to the severity of the non-compliance.

2.1.1. Risk Assessment and Organizational Size.

The new regulation introduces a more sophisticated approach to assessing the risk associated with each non-compliance. In this sense, it considers not only the nature of the non-compliance but also the size and capacity of the obligated subject to comply with its obligations. This allows for greater flexibility and fairness in the application of sanctions, adapting the measures to the specific circumstances of each case.

2.1.2. Background and Behaviors of the Case.

Another innovative aspect of the new Summary Procedure introduced by FIU Resolution No. 90/2024 is the consideration of the background and behaviors of the obligated subject.

The new resolution evaluates whether the subject has previously incurred non-compliances, their behavior during the summary process, and their willingness to correct deficiencies.

This innovative approach encourages continuous improvement and voluntary compliance by the obligated subject, strengthening the preventive system integrally.

2.2. Summary Procedure.

FIU Resolution 90/2024 also introduces the possibility of a summary procedure for certain cases of minor non-compliances that have not generated a sensitive risk to the Argentine AML/CFT/CPF system.

This procedure is subject to the fulfillment of certain requirements and allows for greater speed and economy in the resolution of summaries.

The summary procedure offers a more agile alternative to resolve simple cases, reducing administrative burden and accelerating the implementation of corrective measures.

2.2.1. Requirements and Conditions.

To access the summary procedure, obligated subjects must meet a series of requirements, such as the absence of serious antecedents and the acceptance of the provisional liquidation of charges.

Additionally, they must commit to immediately correcting the deficiencies found. These conditions ensure that the summary procedure is applied only in appropriate cases, maintaining the integrity of the preventive system.

2.2.2. Benefits of the Summary Procedure.

The summary procedure offers several benefits for both the UIF and the obligated subjects. Primarily, it aims to reduce resolution times, lower administrative costs, and provide a quicker and more effective response to non-compliances. This not only improves the efficiency of the system but also encourages voluntary and proactive compliance by obligated subjects.

2.3. Notification System and Electronic Processing.

Another important change is the approval of a new Notification System and Electronic Processing of Files. This system is designed to improve the efficiency and transparency of the management of summaries, facilitating communication and access to information for obligated subjects and the FIU.

FIU Resolution No. 90/2024 introduces an advanced Notification System and Electronic Processing of Files. This system is essential for modernizing and making the case handling process within the FIU more efficient.

2.3.1. Implementation and Operation.

Next, we will examine Annex II of the Resolution, highlighting key aspects and their impact on the management of summary procedures.

a) Registration in the System and User Code Management. Articles 1 and 2: Registration Procedure and User Responsibility.

The registration procedure in the system is straightforward and can be done either in person or remotely. Article 1 details that the respondent or their representative must request a User Code, which is essential to access the platform. Article 2 establishes the importance of the custody and confidentiality of this code.

The ease of access, both personal and remote, represents a significant improvement that facilitates the participation of respondents in the process. However, the responsibility for the custody and confidentiality of the User Code lies entirely with the respondent, which can be a critical point if clear security measures and guidance for users are not established.

b) Electronic Notifications and Procedures (Article 3: Effects of Notifications).

Notifications through the system are considered valid from 0 hours the day after their availability. This obliges respondents and their representatives to enter the system daily to stay informed.

This approach ensures that notifications are quick and efficient, although it will require adaptation to the system for all parties, especially those not familiar with regular use of electronic platforms.

c) System Inoperability.

Article 4 establishes that if the system is not operational, the FIU will declare those days as non-working, which will be informed on the website and at the organization's entry desks.

This measure is crucial to ensure fairness in the process and to prevent users from being disadvantaged by technical failures. However, it is important that these notifications are also sent by other means of communication to ensure that all involved are properly informed.

d) Digital Submissions and Document Validity.

According to Articles 6 and 7 of Annex 2 of UIF Resolution No. 90/2024, respondents can make digital submissions, which will have full legal validity and effectiveness. These documents are considered sufficient proof of their existence and the information contained therein.

In this aspect, the UIF must ensure that obtaining such signatures is an accessible and clearly explained process.

2.3.2. Advantages of Digitalization.

a) Efficiency and Effectiveness.

The implementation of this electronic system not only streamlines the UIF's internal processes but also improves the transparency and traceability of actions taken. This is crucial for the effectiveness of the AML/CTF/CPF system, as it allows for a faster and more coordinated response to detected threats.

Its success will largely depend on the adequate training of all users and continuous support to resolve technical issues. Additionally, information security must be a priority to avoid breaches that could compromise sensitive data.

b) Transparency and Traceability.

The complete digitalization of the summary procedure ensures that all actions are traceable and transparent. This not only strengthens confidence in the system but also allows for more effective auditing of the process.

While transparency is an undeniable benefit, privacy and confidentiality implications of digital information must also be considered. The UIF must implement robust security measures to protect sensitive information and ensure that only authorized persons have access to it.

c) Modernization of the System.

The Notification System and Electronic Processing of Files introduced by FIU Resolution 90/2024 represent a significant advance in the modernization of FIU processes.

Digitalization of administrative processes offers multiple advantages, such as error reduction, greater transparency and traceability of actions, and easier and faster access to information.

These improvements benefit not only the FIU but also the obligated subjects, who can manage their obligations more effectively and with less bureaucratic burden.

Chapter 3: Impact on the AML/CTF/CPF System.

3.1. Effectiveness and Proportionality of Sanctions.

The changes introduced by FIU Resolution 90/2024 are expected to have a significant impact on the effectiveness and proportionality of sanctions applied to obligated subjects.

By incorporating weighting factors and introducing the summary procedure, the new regulation allows for a more balanced and fair application of sanctions.

This contributes to greater compliance with AML/CTF/CPF obligations and strengthens the preventive system as a whole.

3.2. Greater Efficiency and Transparency

The implementation of the Notification System and Electronic Processing of Files significantly improves the efficiency and transparency of summary procedures.

By facilitating communication and access to information, this system allows for faster and more effective management of summaries.

Additionally, digitalization of administrative processes reduces the risk of errors and increases the traceability of actions, contributing to greater trust in the AML/CTF/CPF system.

3.3. Increased Compliance and Risk Mitigation

The new regulation encourages continuous improvement and voluntary compliance by obligated subjects.

By considering the background and behavior of the obligated subject, the new regulation promotes the adoption of best practices and the correction of deficiencies.

This proactive approach not only improves compliance with AML/CTF/CPF obligations but also mitigates risks and strengthens the preventive system.

Final Conclusion

FIU Resolution 90/2024 represents a significant advance in the Argentine regulatory framework for the prevention of money laundering and terrorist financing. By introducing an updated summary procedure, incorporating weighting factors, and implementing a Notification System and Electronic Processing of Files, the new regulation strengthens the effectiveness, efficiency, and transparency of the AML/CTF/CPF system.

These changes contribute to greater compliance with obligations, mitigate risks, and enhance the overall integrity of the preventive system.

Notes

1. Resolution FIU No. 111/2012 was repealed.

2. FATF (Financial Action Task Force) is the global standard-setting body for AML/CTF/CPF.

3. Summary Procedure: An administrative process for the application of sanctions.

4. Law No. 25.246: Law for the Prevention and Suppression of Money Laundering in Argentina.

5. AML/CTF/CPF: Anti-Money Laundering/Counter Terrorism Financing/Counter Proliferation Financing.