On October 17 2012 an executive order promulgating the Federal Act to Prevent and Identify Illegally Funded Transactions was published in the Federal Official Gazette. The purpose of the act is to detect and investigate activities and transactions involving resources that have been illegally obtained.
Transactions involving illegal funds are those where a party acquires, sells, manages, retains, exchanges, deposits, uses as collateral, invests, transports or transfers resources, rights or goods, with a knowledge that such transactions arise from, or imply, an unlawful activity for concealing, disguising or preventing the origin, location, destination or title to such resources, right or goods.
Pursuant to the act, financial institutions must satisfy certain obligations, including:
- implementing measures and actions to prevent and detect acts, omissions or transactions involving illegal funds;
- implementing mechanisms or procedures to identify the background, business or professional activity of clients and customers;
- regularly filing reports with the Treasury Department on transactions with clients and customers and the services provided to them. In addition, financial institutions must file reports on any action taken by their directors, officers, legal representatives and employees which may have been conducted using illegal funds; and
- retaining documents containing information on the identity of clients and customers, as well as information on directors, officers, legal representatives and employees, for a minimum of 10 years.
The act is due to come into force on July 18 2013.
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