Money laundering is the process by which goods or assets from criminal activity are made to appear as if they were derived from a legitimate and legal source.
The Financial Action Task Force (FATF), established in 1989 by the G-7, combats money laundering at the international level. There are also other institutions similar to the FATF combating money laundering internationally.
In Spain, the Commission on the Prevention of Money Laundering and Monetary Infringements takes significant responsibility in the development of prevention policy and the fight against money laundering.
With the adoption of Royal Decree Law 304/2014 in May 2014, came the approval in Spain of the regulations of Law 10/2010 of 28 April 2010, on the prevention of money laundering and financing of terrorism.
The regulation establishes that the Prevention of Money Laundering Act shall apply to:
- Credit institutions
- Investment service firms
- Management companies of venture capital entities
- Auditors, external accountants and tax advisers
- Property developers and persons whose business activities include those of agency, commission or brokerage in property trading
- Notaries and property registrars
- Lawyers, barristers and other independent professionals when they participate in the design, implementation, or advise on transactions on behalf of clients relating to the purchase and sale of goods
- Gambling casinos
- Professional dealers in jewels, precious stones, or metals
- Professional dealers in works of art or antiques
Obligations under the Regulations
The regulated entities shall store copies of the identification documents in optical, magnetic or electronic media.
Additionally, in the same medium, the copies of the supporting documents for the realization of revenue operations, withdrawal or transfer funds from a credit institution account and the supporting documents for the order and receipt of fund transfers from payment institutions or currency conversions should be stored.
In some cases, regulated entities (including representatives) are exempt if they have less than ten employees as well as entities whose annual turnover or annual balance sheet total does not exceed 2 million euros. If a business group exceeds these amounts then the exception shall not apply to the regulated entities.
The regulated entities and representatives covered by Article 2.1 i) to u) that have less than ten workers, including agents, and an annual turnover or annual balance sheet total under 2 million euros, are excluded from:
- Documenting risk analysis
- Having a prevention manual
- Creating internal monitoring bodies
- Undergoing external review
- Staff training plan
In general, the requirements are flexible for smaller size entities to fulfil, but this does not mean less control or exemption from the obligation to report suspicious behaviour.
Laura Chetail & Nicolás Melchior
This article is not considered as legal advice