The National Assembly has enacted the Law for Money Laundering and Crime Financing Prevention.
Money laundering is criminalized under article 317 of the Integrated Organic Criminal Code. It has twenty-one governing verbs that configure the typified crime.
The primary objective of this law is to eradicate, prevent and detect money laundering in all its different modalities. When referring to modalities, we mean, the use of legal instruments as a means to launder money. That is why, in this new legal body there is a special focus on donations and transfers to a beneficiary free of charge, trusts and companies, since they are considered as instruments used to launder money.
There are several changes and amendments brought by this law, specially the ones regarding new institutions and businesses that are bound to report any unusual or unjustified economic transaction to the Unit of Financial and Economic Analysis.
According to article 3 of the aforementioned law, unusual or unjustified economic transactions are: any economic operation, by a legal or natural person, that does not correspond to the economic and financial profile they have maintained in the entity and cannot be sustained. Furthermore, the businesses bound by this law must report any operation greater than ten thousand dollars.
Previously, this was a requirement that had to be complied only by financial institutions, which continue to be bound by this requirement. Even more, the aforementioned institutions still need to have a compliance officer in their administrative staff that is designated by the Banks Superintendence and files reports to the Unit of Financial and Economic Analysis.
The institutions required reporting suspicious operations and transactions greater than ten thousand dollars are:
- Stock Exchanges
- Stock Brokerage firms
- Package shipment companies
- Travel agencies and tour operators
- Jewelry, antiques and art sellers
- Public Notaries
- Non-governmental agencies and foundations
- Car dealers, companies and natural persons
- Real estate and construction
- Property and trade Registrars
Furthermore, regulatory entities such as the Banks Superintendence, Companies Superintendence, Ecuadorian National Customs Secretary and the Social and Solidarity Economy Superintendence have the option of establishing its own anti money-laundering units, which, will report to the Financial and Economic Action Unit of any suspicious transaction.
The Law for Money Laundering and Crime Financing Prevention prohibits financial institutions of having encrypted accounts and investments. It also imposes the obligations for the latter to register any operation or transactions, one or multiple, that amount to ten thousand dollars or more made to the same person for the period of one month.
An important aspect of the new law is that the Ecuadorian state asserts extraterritorial jurisdiction to recover assets located in a foreign country, that are derived of money laundering committed in Ecuador.
The Governing Body is the Board of Monetary and Financial Regulation, which will regulate on these matters. The Financial and Economic Action Unit is not an enforcement agency, however; the institutions listed above must send reports to the latter since it is a regulatory agency. Failure to comply with these provisions by the aforementioned entities will result in a fine that can go from 1 to 20 basic salaries.
The procedural aspect for sanctioning money laundering is: the Financial and Economic Action Unit receives the reports of suspicious and unjustified economic transactions and it sends all the information to the General Attorneys Office, so the offenders can be criminally prosecuted.
Ecuador enacted this law to be in good standing with the F.A.T.F. and to show it is doing everything it can to stop money laundering in the country. This effort must be followed by cooperation agreements with enforcement agencies around the globe.