On January 23, the Central Bank published Circular No. 3,978 modifying the rules on the policies, procedures and internal controls to be adopted by regulated institutions in their efforts to prevent money laundering and terrorism financing. The regulation will enter into force on July 1.
The regulatory improvements seek to make the relevant procedures more efficient and effective by extending the use of a risk-based approach, such as reinforcing controls for higher risk situations and simplifying them for lower risk situations. The entities regulated must perform a specific internal risk audit to identify and measure how likely their products and services are to be involved in money laundering and terrorism financing activities.
Customer identification procedures have also been improved, through measures aimed at collecting, verifying and validating information about the nature of the customer business relationship. The new regulations also require institutions to implement procedures to profile their employees, partners and outsourced service providers, including identification and qualification procedures.
Regulated institutions must periodically evaluate the effectiveness of these policies, procedures and internal controls, and develop an action plan to address any weaknesses identified. Given the need for these regulated entities to adapt to the new requirements, the circular will only enter into force on July 1, 2020.