Castellán

Background and regulatory framework: Until the entry into force of the recently approved Resolution No. 016/2022, Resolution No. 016/2017 was in force, which established guidelines and criteria for the application of sanctions to non-financial obligated subjects who violated the provisions on money laundering and terrorism financing then in force (Law No. 17,835).

Subsequently, on December 20, 2017, Law No. 19,574 (Comprehensive Law Against Money Laundering) was enacted, replacing the previous regulations, and defined in its article 13 the list of non-financial obligated subjects. This law was regulated by Decree No. 379/018 dated November 12, 2018.

Finally, on March 22, 2022, Resolution No. 016/2022 (hereinafter 'the Resolution') was enacted, replacing the previous one, and aiming to adapt the new criteria for the application of sanctions to current provisions.

Foreseen Infractions

As provided in article 13 of Law No. 19,574 in its paragraph 5, non-compliance with the obligations established for non-financial obligated subjects will result in the application of sanctions by SENACLAFT.

Therefore, the Resolution classifies (i) the different infractions according to their severity, (ii) the sanctions to be imposed based on the committed violation, as well as (iii) the methods of graduation, taking into account various mitigating or aggravating factors.

The infractions are classified into three levels: a) Serious, b) Severe, and c) Minor.

a) Among the serious infractions are - among others - failure to report suspicious transactions when there are clear indications, non-appearance and refusal to provide documentation when required by SENACLAFT; failure to implement enhanced due diligence measures; failure to comply with record-keeping and documentation of operations, among others.

b) Regarding severe infractions, they include failure to report the operation as suspicious when it is evident that the client's intention is to evade proper due diligence; failure to register in the Register of obligated subjects (as provided by article 92 of Regulatory Decree No. 379/2018); omitting the search for client background when necessary; not requesting information on income volume when the situation requires it, among others.

c) Finally, minor infractions include failure to apply simple or normal due diligence measures; the omission by Notaries to verify the due diligence of the client, and any other non-compliance that does not constitute a serious or severe infraction (applying a residual criterion).

Classification of Sanctions

Sanctions will be applied by SENACLAFT taking into account the seriousness of the infraction and the offender's background, consisting of: 1) Warning; 2) Observation; 3) Fine. It will range from a minimum of 1,000 UI (Indexed Units) to a maximum of 20,000,000 UI; 4) Temporary suspension (with a limit of 3 months) or definitive (subject to judicial authorization).

It is established that minor infractions will be sanctioned with a warning or observation. An important modification here is that in the previous regulations, fines were also provided for minor infractions. In the new Resolution, fines were removed from the list of sanctions for minor infractions, proportionally and consistently with their severity.

Severe infractions may be sanctioned with a fine (within the specified figures by the regulation detailed above). However, depending on the circumstances and the obligated subject's profile (e.g. collaboration behavior, importance or volume, etc.), only an observation may be applied.

Finally, serious infractions may be sanctioned with a fine, temporary suspension, or definitive suspension.

Graduation of Fines

It should be noted that the assessment of fines (within the minimum and maximum mentioned) will be determined taking into account the circumstances of the case, the offender's conduct, and the usual business volume of the infractor (income).

Therefore, various scales of fines to be applied are established, based on the Sworn Statements submitted by the infractor to the Tax Administration Directorate (hereinafter 'D.G.I').

In the event that the obligated subject is not registered with D.G.I, their income will be calculated based on the operations in which they participated in the audited period. If this is not possible, a percentage between 1% and 5% of the volume of transactions or operations (definition added in the new Resolution) not declared that can be detected by supervisors will be set.

Finally, it is established that once the amount of the fine is determined, it may be increased or decreased by up to 50%, considering certain aggravating or mitigating circumstances, which we will develop below.

Graduation of Sanctions. Mitigating and Aggravating Circumstances

As mentioned, in order to graduate the applicable sanctions, the regulations provide that the nature of the violated obligation, its magnitude, the amount of the operation, the existence or absence of intentionality, and the profile of the offender will be taken into account, considering also the possible existence of aggravating or mitigating circumstances.

Thus, a mitigating circumstance is considered when the obligated subject has collaborated in clarifying the facts by sending information requested by SENACLAFT. The sanction may also be mitigated when it is determined that the non-compliance was occasional or isolated.

Regarding aggravating circumstances, it is worth mentioning the concealment of the infraction by the obligated subject (for example, hiding information), that the offender has obtained benefits for themselves or third parties, recidivism (with certain characteristics), or that the offender has received firm sanctions - of any nature - in the last 5 years.

Special Situations

Finally, the Resolution provides for 'special situations' that will allow increasing the amount of the fine up to the maximum limit of 20,000,000 UI, or even determining the suspension of the subject when it is verified:

a) The habitual nature of the infractions by the obligated subject (meeting certain characteristics).

b) When it is found that the obligated subject consciously and deliberately participated in a money laundering or terrorism financing operation. Here, the reference contained in Resolution No. 16/017 is removed, which additionally required the omission of reporting a suspicious operation. We understand that this makes sense since the relevant fact for qualification is the subject's voluntary participation in the operation.

c) When the obligated subject has altered the content, or modified in their favor, the date of the documentation to be submitted to SENACLAFT.

Establishment of Electronic Domicile

Finally, it is reminded of the obligation established by Decree No. 355/2021, to establish and subscribe to the electronic or digital Domicile system (DOMEL), required of all obligated subjects, as well as any individual or legal entity appearing before SENACLAFT. This obligation, which was to be fulfilled before January 26, 2022, was finally extended until May 31, 2022 (Decree No. 052/022).

Dr. Lucía Acosta - Dr. Taís Falcón

Montevideo, April 8, 2022