WHAT ARE THE
Money laundering and terrorism financing laws in Colombia?
In Colombia, money laundering and terrorism financing are serious offences and are governed by the following laws and regulations:
- Law 599 of 2000 (Penal Code): This law criminalises money laundering and establishes penalties for individuals or entities engaged in money laundering activities. It defines money laundering offences and outlines the legal framework for investigating and prosecuting money laundering crimes in Colombia.
- Law 793 of 2002 (Anti-Money Laundering Regime): This law establishes measures to prevent and combat money laundering in Colombia. It outlines the obligations of reporting entities, such as financial institutions, designated non-financial businesses and professions (DNFBPs), and casinos, to implement anti-money laundering measures.
- Decree 1497 of 2014: This decree regulates the functioning of the Financial Information and Analysis Unit (Unidad de Información y Análisis Financiero - UIAF), which is the government agency responsible for receiving, analysing, and disseminating reports on suspicious transactions related to money laundering and terrorism financing. It outlines the procedures for reporting entities to submit suspicious transaction reports to the UIAF.
- Law 1121 of 2006 (Counterterrorism Financing Regime): This law establishes measures to prevent and combat terrorism financing in Colombia. It requires reporting entities to implement measures to identify and report suspicious transactions related to terrorism financing and to comply with international sanctions regimes related to terrorism.
- Resolution 0555 of 2019: This resolution issued by the Financial Superintendence of Colombia (Superintendencia Financiera de Colombia - SFC) establishes guidelines for the implementation of anti-money laundering (AML) and counterterrorism financing (CTF) measures by financial institutions and other reporting entities. It sets out requirements for business-wide ML/TF risk assessments, customer due diligence, internal controls, and reporting of suspicious transactions.
- Decree 1674 of 2016: This decree regulates the implementation of AML and CTF measures in the real estate sector. It establishes obligations for real estate agents, developers, and other professionals involved in real estate transactions to prevent the misuse of real estate transactions for money laundering and terrorism financing purposes.
WHAT ARE THE
Key obligations reporting entities have under Colombian laws?
The key obligations under the AML/CTF laws in Colombia include:
- Business-Wide ML/TF Risk Assessments: Reporting entities must conduct business-wide risk assessments to identify and assess the money laundering and terrorism financing risks associated with their business activities, customers, products, and services. This involves evaluating the likelihood and potential impact of money laundering and terrorism financing risks and implementing measures to mitigate those risks.
- Internal Controls and Compliance Programs: Reporting entities are required to establish and maintain internal controls and compliance programs to ensure adherence to AML and CTF regulations. This includes policies, procedures, and training programs for employees to detect and prevent money laundering and terrorism financing activities.
- Customer Due Diligence (CDD): Reporting entities are required to conduct customer due diligence procedures to verify the identity of their customers and assess the risk associated with their business relationships. This involves collecting information such as the customer's name, address, identification documents, and the nature of the business relationship.
- Enhanced Customer Due Diligence (EDD): In cases where there is a higher risk of money laundering or terrorism financing, reporting entities must apply enhanced customer due diligence measures. This may include obtaining additional information about the customer, the source of funds/wealth, and the purpose of the transactions.
- Employee Training: Regular training must be provided to employees, ensuring they are knowledgeable about AML/CFT laws and regulations, including how to identify and report suspicious activities. Ongoing awareness programs should also be in place to keep staff informed of evolving risks and responsibilities related to money laundering and terrorism financing.
- Suspicious Transaction Reporting: Reporting entities are obligated to report suspicious transactions to the Financial Information and Analysis Unit (Unidad de Información y Análisis Financiero - UIAF). This includes transactions that are unusual, inconsistent with the customer's known profile or business activities, or otherwise raise suspicion of money laundering or terrorism financing.
- Record-Keeping: Reporting entities must maintain records of customer identification, transactions, and due diligence measures for a specified period. These records must be sufficient to enable authorities to reconstruct transactions and demonstrate compliance with AML and CTF requirements.
- Reporting Obligations to Authorities: In addition to reporting suspicious transactions, reporting entities may have other reporting obligations to regulatory authorities. This may include reporting large cash transactions, cross-border fund transfers, and other activities specified in the regulations.
- Independent Audits and Reviews: Institutions must conduct independent audits and reviews of their AML/CFT programs to ensure compliance with regulations and to assess the effectiveness of their internal controls and procedures.
WHO ARE THE
ML/TF regulators in Colombia and what functions do they perform?
In Colombia, the regulators responsible for overseeing and enforcing AML/CTF measures are primarily:
- Financial Information and Analysis Unit (UIAF): The UIAF, or Unidad de Información y Análisis Financiero, is the primary government agency responsible for receiving, analysing, and disseminating reports on suspicious transactions related to money laundering and terrorism financing. It operates under the Ministry of Finance and Public Credit and plays a central role in Colombia's efforts to combat financial crimes.
- Superintendence of Companies (Superintendencia de Sociedades): The Superintendence of Companies regulates and supervises companies, including financial institutions and designated non-financial businesses and professions, to ensure compliance with AML and CTF regulations. It oversees compliance with AML/CFT requirements in the corporate sector.
- Superintendence of Finance (Superintendencia Financiera): The Superintendence of Finance is responsible for regulating and supervising financial institutions, including banks, insurance companies, brokerage firms, and other financial intermediaries. It ensures compliance with AML and CTF regulations within the financial sector.
- National Directorate of Taxes and Customs (Dirección de Impuestos y Aduanas Nacionales - DIAN): DIAN is responsible for customs and tax enforcement in Colombia. It may play a role in monitoring cross-border transactions and enforcing AML/CFT regulations related to international trade and transactions.
- Attorney General's Office (Fiscalía General de la Nación): The Attorney General's Office is responsible for investigating and prosecuting money laundering and terrorism financing offences in Colombia. It works closely with the UIAF and other law enforcement agencies to pursue criminal cases related to financial crimes.
- National Police (Policía Nacional): The National Police may be involved in investigations related to money laundering and terrorism financing, particularly in cases involving organised crime or illicit financial activities.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
The regulated industry sectors in Colombia subject to AML/CTF regulations include, but are not limited to:
Designated Non-Financial Businesses and Professions (DNFBPs)
DNFBPs are entities or individuals outside the traditional financial sector that are susceptible to being used for money laundering or terrorism financing purposes. In Colombia, DNFBPs may include lawyers, notaries, accountants, real estate agents, trust and company service providers, dealers in precious metals or stones, and other professionals or businesses engaged in high-value transactions.
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
The penalties for non-compliance with money laundering and terrorism financing laws in Colombia can include the following:
- Administrative Sanctions: Regulatory authorities, such as the Financial Information and Analysis Unit (UIAF), the Superintendence of Finance, and other relevant supervisory bodies, have the authority to impose administrative sanctions on entities found to be in violation of AML/CTF regulations. These sanctions may include fines, warnings, temporary suspensions of operations, or revocation of operating licences.
- Criminal Penalties: Serious violations of AML/CFT laws may lead to criminal prosecution. Individuals or entities engaged in money laundering, terrorism financing, or related offences may face criminal charges, which can result in imprisonment, substantial fines, asset freezing or seizing or any combination of these. Criminal penalties may vary depending on the severity of the offence and applicable laws.
- Civil Penalties: In addition to administrative and criminal sanctions, non-compliance with AML/CTF laws may expose individuals and entities to civil penalties. This could involve legal action brought by regulatory authorities or affected parties seeking damages for harm caused by the violation of AML/CTF regulations.