Anti-Money Laundering and Terrorism Financing Regulatory Compliance

7 June 2018

The Dominican Republic heads towards stronger anti-money laundering and terrorism financing legislation.

The Tax Collection Agency (DGII) announces general rules of mandatory compliance for obligated parties

On January, 2018 the National Tax Collection Agency announced five general rules containing certain dispositions to be complied by all obligated parties under Law 155-17.

The obligated parties are distinguished as financial or non-financial. The National Tax Collection Agency is the institution appointed to oversee Law 155-17 enforcement for non-financial obligated parties.

Following some of non-financial obligated parties as set forth in the provisions of this law:

– Attorneys
– Public Notaries
– Accountants
– Factoring companies
– Individuals or companies whose regular activities are the purchase and sale of vehicles, boats or airplanes
– Real Estate agents
– Construction companies
– Trust companies that do not offer services to financial or public funded entities
– Merchants of jewels, precious metals and precious stones.
– Individuals or companies whose regular activity is the commercialization of firearms.
– Pawn shops

For each sector of the non-financial obligated parties, the National Tax Collection Agency has published specific sectoral rulings of mandatory compliance.

Minimum Requirements

Some of the general aspects contained in the rulings are the following:

– Requirements for the appointment of Compliance Officers.

– A non-criminal record is mandatory for future hiring of employees, as well as training sessions to all employees regarding money laundering prevention.

– Requirements that must be included in the company’s compliance manual.

– Obligation to Exchange information and statistics of clients with the Tax Collection Agency.

– Establishes a regularization and inspection system within the Tax Collection Agency that seeks to sanction non-compliance actions perpetrated by non-financial obligated parties and company’s employees.

Law 155-17 Enforcement

On November 2017, the Executive Branch issued Ruling No. 408-17 about general enforcement of Money Laundering and Terrorism Financing Law; and Ruling 407-17 about Freezing of Assets or Goods associated to individuals or entities implicated on terrorism.

Regulation 408-07 is intended to facilitate the application of the provisions contained in Law 155-17, providing clarity regarding the responsibilities and processes to be followed by the reporting entities in order to prevent money laundering and financing of terrorism.

Additionally, regulation 408-07 contains provisions that allow identifying the individual who is the final beneficiary of a legal entity, as well as the minimum information that should be required to such legal entity.

Furthermore, this regulation indicates that the obliged subjects must carry out external audits that monitor and evaluate anti-money laundering regulatory compliance, policies and internal procedures.

Reliable Payment Evidence

A relevant contribution of Regulation 408-17 is that it defines the means that attest to the settlement or payment of the transactions stipulated in Article 64 of Law 155-17.

According to the Regulation, “deposits in bank accounts, checks, national or international transfers, credit or debit cards or other financial instruments are considered as reliable proof of payment.”

The reliable proofs of payment shall be required by the Tax Collection Agency, Public Notaries and Commercial and Title Registries, from the issuance of certain instructions by the competent authorities.

Implementation of Due Diligence in Clients

Regulation 408-07 enumerates the cases in which the obligated parties must implement the due diligence process prior to initiating a commercial relationship with a client. Said Regulation grants the term of one year – initiating from the issuance of the regulation – to update the records of current clients.

Extended Due Diligence for Politically Exposed Persons

In the case of clients identified as Politically Exposed Persons (PEP) -the Regulation specifies the criteria to be considered as a PEP- thus indicating that an extended due diligence must be performed.
Prior to the initiation of the commercial relationship with PEP clients, the approval of the management of the Obligated Party must be obtained.

Preventive freezing of property or assets

Regulation 407-17 focuses on the procedures for the preventive freezing of property or assets, as indicated by the lists issued by the UN or the Dominican authorities of persons sanctioned for terrorism.

In light of this, obligated subjects must be aware of any updates to those lists to be able to proceed with actions to freeze property or assets accordingly.

In order to include or exclude persons or entities sanctioned for terrorism on the list provided by the UN, Regulation 407-17 provides the corresponding criteria and procedure.

On the way towards a stronger legislation

The general regulations issued by the Tax Collection Agency, as well as Regulations 408-07 and 407-17 pave the way of the Dominican Republic towards a stronger legislation against the prevention of money laundering and financing of terrorism.

As a member of Grupo Acción Financiera Internacional de Latinoamérica (GAFILAT), these resolutions comply with the regulatory parameters established by this institution to battle money laundering and the financing of terrorism.