mutual evaluation report of portugal 2017

Anti-money laundering and counter-terrorist financing measures in Portugal – Mutual Evaluation Report – December 2017 1

Anti-money laundering and counter-terrorist financing (AML/CFT) measures in Portugal Fourth Round Mutual Evaluation

Key findings, ratings and priority actions December 2017 www.fatf-gafi.org/publications/mutualevaluations/documents/mer-portugal-2017.html

http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-portugal-2017.html







Anti-money laundering and counter-terrorist financing measures in Portugal – Mutual Evaluation Report – December 2017

Ratings – Effectiveness (1/3)

2

Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF)

Extent to which Portugal has achieved this objective

1. ML and TF risks are understood and, where appropriate, actions co-ordinated domestically to combat ML and TF

Substantial

2. International co-operation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets

Substantial

3. Supervisors appropriately supervise, monitor and regulate financial institutions and designated non-financial businesses and professions (DNFBPs) for compliance with AML/CFT requirements commensurate with their risks.

Moderate

4. Financial institutions and DNFBPs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions.

Moderate




5. Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments

Moderate

6. Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations.

Moderate

7. Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions

Substantial

8. Proceeds and instrumentalities of crime are confiscated. Moderate





9. Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.

Substantial

10. Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the non-profit sector.

Substantial

11. Persons and entities involved in the proliferation of weapons of mass destruction are prevented from raising, moving and using funds, consistent with the relevant United Nations Security Council Resolutions.

Substantial



Ratings – Effectiveness

December 2017

0

6

5

0

HighSubstantialModerateLow

11-Dec-17 6

Ratings – technical compliance (1/5)

AML/CFT POLICIES AND COORDINATION1. Assessing risks & applying a risk-based approach Large Lar Lar Lar Largely compliant2. National cooperation and coordination Large Lar Lar Lar Largely compliant

MONEY LAUNDERING AND CONFISCATION3. Money laundering offence Large Lar Lar Lar Largely compliant4. Confiscation and provisional measures CompCoCoCo CompliantTERRORIST FINANCING AND FINANCING OF PROLIFERATION5. Terrorist financing offence Large Lar Lar Lar Largely compliant6. Targeted financial sanctions related to terrorism & terrorist financing CompCoCoCo Compliant7. Targeted financial sanctions related to proliferation CompCoCoCo Compliant8. Non-profit organisations Parti Par Pa Pa Partially compliant

11-Dec-17 7


PREVENTIVE MEASURES9. Financial institution secrecy laws Large Lar Lar Lar Largely compliantCustomer due diligence and record keeping10. Customer due diligence Large Lar Lar Lar Largely compliant11. Record keeping CompCoCoCo CompliantAdditional measures for specific customers and activities12. Politically exposed persons Large Lar Lar Lar Largely compliant13. Correspondent banking Parti Par Pa Pa Partially compliant14. Money or value transfer services CompCoCoCo Compliant15. New technologies Large Lar Lar Lar Largely compliant16. Wire transfers Parti Par Pa Pa Partially compliant

11-Dec-17 8


PREVENTIVE MEASURES (continued)Reliance, Controls and Financial Groups17. Reliance on third parties Large Lar Lar Lar Largely compliant18. Internal controls and foreign branches and subsidiaries Large Lar Lar Lar Largely compliant19. Higher-risk countries Large Lar Lar Lar Largely compliantReporting of suspicious transactions20. Reporting of suspicious transactions Large Lar Lar Lar Largely compliant21. Tipping-off and confidentiality CompCoCoCo CompliantDesignated non-financial Businesses and Professions (DNFBPs)22. DNFBPs: Customer due diligence Parti Par Pa Pa Partially compliant23. DNFBPs: Other measures Large Lar Lar Lar Largely compliant

11-Dec-17 9


TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS24. Transparency and beneficial ownership of legal persons Parti Pa Pa Pa Partially compliant25. Transparency and beneficial ownership of legal Parti Pa Pa Pa Partially compliantPOWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURESRegulation and Supervision26. Regulation and supervision of financial institutions Large Lar Lar Lar Largely compliant27. Powers of supervisors CompCoCoCo Compliant28. Regulation and supervision of DNFBPs Large Lar Lar Lar Largely compliantOperational and Law Enforcement29. Financial intelligence units Large Lar Lar Lar Largely compliant30. Responsibilities of law enforcement and investigative authorities CompCoCoCo Compliant31. Powers of law enforcement and investigative authorities CompCoCoCo Compliant32. Cash couriers Large Lar Lar Lar Largely compliant

11-Dec-17 10


POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES General Requirements 33. Statistics Large Lar Lar Lar Largely compliant34. Guidance and feedback Large Lar Lar Lar Largely compliantSanctions35. Sanctions Large Lar Lar Lar Largely compliantINTERNATIONAL COOPERATION36. International instruments CompCoCoCo Compliant37. Mutual legal assistance Large Lar Lar Lar Largely compliant38. Mutual legal assistance: freezing and confiscation CompCoCoCo Compliant39. Extradition CompCoCoCo Compliant40. Other forms of international cooperation Large Lar Lar Lar Largely compliant


Ratings – technical compliance

12

22

6 0

Compliant

Largely compliant

Partially compliant

Non compliant


Key findings Overall, there is a fair level of understanding of the money

laundering/terrorist financing (ML/TF) risks in Portugal, especially by law enforcement authorities and financial supervisors. However, there is a mixed level of understanding amongst DNFBP supervisors.

The National Risk Assessment (NRA) was based on public and private participation and provides an overview of the nature and level of ML/TF risks in Portugal. The methodology can still be improved and a review of specific sectors still needs to be conducted in order to have a comprehensive overview of ML/TF risks in the country, in particular, in respect to TF risks associated with Non-Profit Organisations (NPO).

Financial intelligence, primarily based on suspicious transaction reports (STRs), is collected, used and disseminated amongst authorities for AML/CFT purposes. Operational authorities have direct or indirect access to comprehensive databases held by relevant agencies in order to facilitate the circulation and use of information for ML/TF investigations.

December 2017 12


Key findings Assessors have concerns regarding the resource implications of

the dual system of reporting suspicious transactions to both the FIU and the Public Prosecution office (DCIAP), and about the FIU’s capacities to adequately process and analyse the increasing number of STRs received. In addition, the FIU does not have relevant resources to produce strategic analysis.

Authorities show a high degree of commitment and capacity to investigate and prosecute ML cases, including complex cases, consistent with the main ML risks in the country. Criminal sanctions applied are proportionate and dissuasive.

Portugal has had good results in freezing assets at the early stage of ML investigations to prevent the flight and dissipation of assets. This practice, combined with the use of the “enlarged confiscation” regime, demonstrates the prosecution’s priority to make crime unprofitable for criminals.

13 December 2017


Key findings

TF is pursued as a distinct criminal activity, and parallel financial investigations are conducted to support counter-terrorism investigations. TF assets and instrumentalities related to TF activities are seized and confiscated. TF prosecutions have been initiated, but there have been no TF convictions in Portugal to date.

Designations at the UN level apply directly in Portugal without the need for EU transposition. Processes and procedures are in place to fully implement TFS in relation to TF and PF, and authorities demonstrated a high degree of competency in coordinating CFT and CPF activities.

Portuguese authorities have been active in investigating and disrupting potential PF cases and cooperate well with authorities of other jurisdictions.

In the financial sector, the application of proportionate mitigation measures by financial institutions (FIs) is satisfactory. Progress still needs to be made regarding the understanding of the beneficial ownership (BO) requirements. The application of risk-based supervisory models is ongoing, with Banco de Portugal being the most advanced in this regard.

December 2017 14


Key findings Regarding DNFBPs, the understanding of ML/TF risks in the sector as a whole is

moderate, including by sectors at higher risk of ML/TF. Supervisors conduct limited AML/CFT supervisory activities, which primarily follow a rule-based approach. Measures to prevent and detect unauthorised activities are applied in sectors where informal activities are a major issue.

There is generally a good level of transparency of basic information on legal persons and arrangements, including foreign trusts established in the Madeira Free Trade Zone (FTZ). Sanctions applicable to non-compliance with transparency obligations are not dissuasive. Information on beneficial ownership is mainly available from FIs, but the lack of understanding of the requirements by some FIs creates some concerns about the reliability of this information.

International co-operation between Portuguese authorities and foreign counterparts is proactive and collaborative, and provided upon request and spontaneously, with priority given to terrorism and TF-related requests. Mutual Legal Assistance (MLA) and extradition are mainly used as complementary tools, in addition to more informal co-operation channels.

December 2017 15


Priority Actions for Portugal to strengthen its AML/CFT System

Define a comprehensive AML/CFT programme of action to fully address ML/TF risks identified, with priorities, timelines and a specific focus on higher risk sectors and scenarios explicitly covered.

Conduct a comprehensive assessment of the ML/TF risks associated with NPOs and legal persons and arrangements, and implement proportionate actions to address these risks.

Provide adequate technical and human resources to the FIU so that it can effectively fulfil its core responsibility of managing and assessing STRs filed, and develop strategic analysis on an ongoing basis.

16 December 2017


Priority Actions for Portugal to strengthen its AML/CFT System

Conduct awareness-raising and educational outreach on ML/TF risks, AML/CFT preventive requirements and STR obligations for DNFBP sectors, especially those at higher risks of ML/TF abuse.

Allocate resources to DNFBP supervisors in charge of higher risk sectors commensurate to the ML/TF exposure and size of the supervised sector.

Ensure early introduction of the central register of beneficial ownership currently being set up.

Develop and maintain adequate and comprehensive ML/TF-related statistics in order to better support and document Portugal’s understanding and analysis of risks, and improve how Portugal demonstrates its actions taken and results achieved.

17 December 2017

mutual evaluation report of portugal 2017

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