English translation of the original article in Spanish. If there is any discrepancy, the Spanish version prevails.
I.- Introduction.
The purpose of this paper is to comment on the new infringement procedure before the Financial Intelligence Unit (UIF, Unidad de Información Financiera).
Without a doubt, those most interested in learning about the new implications are the reporting entities (sujetos obligados), who are not used to receiving good news.
It concerns the issuance of UIF Resolution 129/2024, published in the Official Gazette (B.O.) on August 19, 2024.
The development is significant because it applies both to the passive subjects2 of the sanctioning regime who may already be charged in a proceeding that has been initiated, and to the rest of the reporting entities who may become involved in a sanctioning procedure in the future.
This regulation (Annex I, approved by Article 1) governs the sanctioning procedure with the aim of bringing speed and effectiveness to the administrative proceeding, and establishes the possibility that all infringements (including those we may call material) be resolved within an abbreviated procedure.
Thus, the procedure for imposing sanctions has two variants. An ordinary modality, which has not changed substantially in recent years, and the abbreviated procedure modality, which marks a before and an after in the administrative proceedings conducted by the UIF. In this respect, Resolution 90/2024 had established an abbreviated procedure, but its application was limited to certain situations.
In the following lines we will highlight the central parts of the new procedure, which is regulated in Annex I of Resolution 129/2024 and consists of thirty-nine (39) articles and two transitional clauses.
Before that, we will briefly review the regulatory and conceptual framework that gave rise to the rule under analysis.
II.- Regulatory framework and background.
Recommendation No. 35 of the Financial Action Task Force (FATF) provides that countries should ensure that there is a range of effective, proportionate and dissuasive sanctions available to deal with natural or legal persons that fail to comply with PLA/FT (anti-money laundering and counter-terrorist financing) requirements, which should be applicable not only to financial institutions and to designated non-financial businesses and professions (APNFD), but also to their directors and senior management.
This recommendation does not merely impose a regulatory duty on our country; it must also be verified in practice, that is, materially.
On March 15, with the publication of Law 27,739 in the Official Gazette, substantial regulatory reforms were introduced into that system in line with the FATF recommendations.
As noted above, that multilateral body is interested not only in verifying the existence of a minimum regulatory framework on money laundering and terrorist financing, but also in assessing how it operates and, in particular, its effectiveness.
Law 27,739 amended the regime of administrative sanctions under the UIF's responsibility3, and incorporated into Law 25,246 remuneration units (unidades retributivas) as the measure for quantifying fines arising from infringements. It also adopted, in furtherance of the sanctioning principle of proportionality, the sanction of a warning (apercibimiento) as a means of enabling sanctioned parties, in cases that so warrant, to improve their internal systems for the prevention of money laundering and terrorist financing without paying a fine.
This range of sanctions, or these different types of sanctions provided for by law for breaches, must be applied within a procedural framework that ensures the right of defense and effective judicial protection.
The UIF Resolutions that have regulated the administrative proceeding in the past were 10/2003, 111/2012, 73/2018, 96/2018 and 116/2020.
Undoubtedly, these rules gradually adapted the ordinary procedure and incorporated technological advances together with accumulated experience.
An important milestone was Resolution 90/2024, since it introduced an abbreviated procedure subject to the fulfillment of certain requirements, for so-called formal breaches and for Reporting Entities that are not repeat offenders. This enables the potential offender to accept the abbreviated procedure, for which it must pay the provisional calculation of charges and undertake to remedy the deficiencies identified.
The new Resolution 129/2024 broadens the situations in which the abbreviated procedure may apply, since it also covers material breaches and allows it to be applied even to repeat-offender reporting entities. In short, the purpose of this amendment is to bring greater speed, economy and effectiveness to the handling of proceedings, as a voluntary alternative to the ordinary administrative proceeding.
Therefore, it remains for us to comment on the ordinary and the abbreviated procedures in order to set out the guidelines of this procedural framework, which is of vital importance to ensure effective protection.
III.- Provisions common to the ordinary and abbreviated procedures.
Chapter I of Annex I4 of Resolution 129/2024 contains common procedural guidelines applicable both to the ordinary regime and to the abbreviated procedure.
III.1. Scope of application.
Accordingly, Article 1 sets out the scope of application of the administrative proceeding based on the sanctions provided for in Chapter IV of Law 25,246.
As regards the parties, the sanctioning procedure will involve the UIF as the accusing party and holder of the punitive claim and, on the other side, a reporting entity that has prima facie breached a rule relating to the preventive regime.
On the objective side, concerning the matter at issue, the aim will be to verify and establish the breach, by action or omission, of the obligations set forth in Law No. 25,246 and its amendments, of the regulations issued by the UIF, and of the corrective actions imposed by the UIF itself at the supervisory stage.
III.2.- Investigating officer and support professional.
Under Articles 2 to 6, the administrative proceeding is conducted by an investigating officer (instructor sumariante), who will be assisted by a support professional.
These officials must accept their appointment in order to carry out all evidentiary steps conducive to investigating the facts that are the subject of the proceeding and to propose sanctions or corrective actions where appropriate.
In short, the investigating officer must direct the procedure seeking to concentrate, as far as possible, in a single act all the steps that need to be taken, ensuring the greatest speed and procedural economy.
The support professional must carry out all other acts and steps requested by the investigating officer that are necessary for the conduct of the administrative proceeding.
III.3.- The participation of the respondent and the burden of proof.
Articles 7 to 9 regulate matters relating to the participation of the respondent, recognizing the right to make submissions, produce evidence, be assisted by counsel or appoint an attorney-in-fact.
They also establish the right to acquiesce in the charges brought and to avail oneself of the rules of the abbreviated procedure when the requirements established for that purpose are met.
The burden of producing evidence falls on the respondent (drafting and processing official requests for information, ensuring the appearance of any witnesses it has offered, and communicating the appointment of experts, the points of expert examination and the deadlines for their production).
III.4.- Notices to the domicile, time limits, access to the file, supplementary rules.
Article 10 provides that notice of the opening of the proceeding will be served at the respondents' electronic domicile registered with the UIF and, should this fail, a formal notice (cédula) will be served under the terms of the CPCCN (National Code of Civil and Commercial Procedure) at the actual or legal domicile.
Article 11 requires that, upon appearing, respondents must state an actual domicile and establish an electronic domicile, on the understanding that notices served there will be valid.
Article 12 provides that time limits will be computed in administrative business days, with filings made up to the first two (2) hours of office hours on the business day immediately following the expiry of the time limit being deemed timely. Article 13 provides for an extension of time limits on account of distance of one day for every 200 kilometers.
Article 14 regulates the possibility of accessing the file from the notice of the resolution opening the proceeding, and Article 15 establishes as supplementary rules the National Administrative Procedures Law 19,549 and its amendments, its Regulatory Decree No. 1759/72, and the National Code of Civil and Commercial Procedure and their respective amendments.
IV.- The ordinary administrative proceeding.
The ordinary procedure begins with an accusation set out in the opening resolution signed by the President of the UIF, which must contain the identification of the facts charged and the provisional legal characterization.
This act must be notified to the respondent (one or several) and is not subject to appeal.
Respondents have ten (10) business days to file a defense statement setting out the facts and evidence relevant to their defense. Objections raised by the respondent will be decided in the final resolution. Only when it may determine the exclusion of a respondent (a sort of lack of standing to be sued) will the objection be addressed beforehand, without suspending the course of the procedure. If the respondent does not appear, the procedure will continue in its absence.
If evidence is to be produced, a production period of twenty (20) days is set, and if there is no evidence to be produced, the matter is declared to be one of pure law and the file passes on for the issuance of the final report.
Hearings may be in person or virtual. The respondent may request to be summoned to testify or may be called to testify without being required to take an oath or promise to tell the truth.
As regards the number of witnesses offered, it may not exceed three (3) for each fact to be proven, nor ten (10) in total. A record will be drawn up of each witness hearing, setting out the questions and their respective answers.
The processing of documentary evidence by way of requests for information will be the responsibility of the party proposing it, and such requests must be answered within a maximum of ten (10) days.
Official requests will be signed and processed by the sponsoring counsel or attorney-in-fact, with a transcription of the order or resolution directing them.
Respondents may offer expert evidence, and must propose the appointment of experts at their own expense, stating their first name, surname and DNI (national identity document number) and the points of expert examination on which they must report.
The investigating officer may obtain technical reports from officials of the UIF itself and/or from other departments of the Public Administration.
Once the evidence has been produced, the investigating officer will order the closing of the evidentiary period and the file will be ready for closing submissions.
Once the closing submission has been filed or the time limit has expired, the investigating officer will prepare the final report setting out his or her conclusions.
After the approval of the head of the Directorate of Administrative Sanctioning Regime (Dirección de Régimen Administrativo Sancionador), the file will be sent to the Directorate of Legal Affairs (Dirección de Asuntos Jurídicos) for the issuance of its legal opinion.
At the end of the procedure, the President of the UIF, after the intervention of the Advisory Council (Consejo Asesor), will issue the final resolution of the proceeding, in which he or she will decide all the relevant issues raised in the file and, as appropriate, will declare: a) The existence of breaches of the rules whose infringement was attributed and the liability or acquittal of the respondents; b) The imposition of the corresponding sanctions; c) The need to apply a corrective action aimed at improving the respondent's system for the prevention of Money Laundering and Terrorist Financing; d) Where applicable, the time limit and terms for payment of the fine imposed, the amount of which must be expressed in legal tender and in the number of modules (módulos) it represents as of the date of the resolution, with an indication that failure to pay will give rise to its judicial enforcement; e) An indication that its issuance exhausts administrative remedies and opens the way to judicial review.
Although the intervention of the Advisory Council is provided for as an unavoidable step in the procedure, its opinion is not binding on the decision of the President of the UIF.
The final Resolution may be challenged directly before the National Court of Appeals in Federal Contentious-Administrative Matters (Cámara Nacional de Apelaciones en lo Contencioso Administrativo Federal). The direct judicial appeal has suspensive effect, may only be based on the unlawfulness of the resolution appealed, and must be filed and substantiated in court within fifteen (15) judicial business days from the date of its notification. The UIF will send, at the court's request, a certified copy of all the administrative records of the measure appealed.
This sanctioning resolution (as it arises from the ordinary procedure) will be published on the UIF website (https://www.argentina.gob.ar/uif/sumarios) and will be communicated to the relevant Supervisory or Control Bodies, Self-Regulatory Entities, and Professional Associations or Councils, for such purposes as they deem appropriate.
If for any reason the sanctioning resolution is modified, the corresponding publication will be made through the same means used to communicate the original sanction.
V.- The abbreviated administrative proceeding.
We see that this procedure is presented as an option for the respondent; it seeks to ensure that the breach is regularized and that no sanction whatsoever is imposed.
It is an alternative dispute resolution method whose purpose is to improve the effectiveness of compliance by reporting entities, through an adequate understanding of the risks of their activity, and the strengthening of the system for the prevention of money laundering, terrorist financing and the proliferation of weapons of mass destruction.
The intention is that the system's only response should not be a penalty, but rather that the reporting entity should have a tool to regularize its situation by fulfilling certain requirements, which we will detail below.
V.1 The nature of the sanctions and of the abbreviated procedure.
At present, the nature of the sanctions imposed by the UIF for this type of infringement is controversial.
On the one hand, it can be argued that they are criminal in nature, by analogy with other types of sanctions provided for in the legal system in relation to breaches of tax or customs rules, on which the Supreme Court of Justice of the Nation has ruled (Fallos 304:1692), holding that: “…nor can the fine be characterized as a tax obligation arising from late payment of customs duties (Fallos 288:356), nor as having a compensatory scope (Fallos 288:336) or one of making amends for the possible harm caused, since its purpose is repressive and it seeks more to strike at the offender's assets than to redress a loss or to constitute a source of revenue for the treasury (Fallos 267:457)”.
Notwithstanding the foregoing, when this issue was submitted for discussion before the courts of the federal contentious-administrative jurisdiction, different Chambers of the Court of Appeals have tended not to recognize the criminal nature of the fines imposed by the UIF, and the CSJN (Argentina's Supreme Court of Justice) has not yet ruled on this issue in a specific case5.
Whether or not an infringement is considered to be criminal in nature has important consequences as regards the principles and guarantees applicable to its interpretation and adjudication, as happened when this same debate took place in tax matters6; we therefore consider it healthy for the CSJN to rule on this issue at some point in order to provide greater legal certainty to the system's participants.
Notwithstanding the foregoing, within the universe of possible breaches of the duties imposed by law, not every infringement deserves a sanction. That is, the principle of legality recognizes the existence of interests that outweigh the imposition of a penalty, and in this way its counterpart, known as the principle of opportunity (discretionary prosecution), comes into play.
Article 39 of the Annex provides that, once the abbreviated procedure has concluded, the final resolution will not create a record nor may it be counted for purposes of repeat offending, provided that no infringement is committed again within three (3) years from the issuance of the final resolution.
We see that this abbreviated procedure has features that, “mutatis mutandi”, link it to the operation of a principle of opportunity (suspension of the trial on probation, full reparation, as established in the Criminal Code). The breach was acknowledged by the offender, there is a sort of economic reparation and subsequent compliance with the rules. For that very reason, no record remains for the party. In this regard, it is accepted that a criterion of opportunity may apply in matters of infringements. This principle or criterion of opportunity is also provided for in respect of crimes. In this regard, it is worth recalling Law 27,147, promulgated on June 17, 2015, which amended Article 59 of the Criminal Code (hereinafter, CP) and established in subsection 5 the possibility of extinguishing the criminal action through the application of a criterion of opportunity, in accordance with the provisions of the corresponding procedural laws.
Marchisio7 conceptualizes the principle of opportunity and points out that “… it is a concept that exclusively encompasses the function of the Public Prosecutor's Office, because it is the state body that has been granted the representation of the ownership of public criminal action and is consequently responsible for outlining, in coordination with the other branches of the State, criminal policy and criminal prosecution policy…judges are barred from acting on their own motion and from convicting if there is no valid accusation…”8. He also maintains that its basis lies “in procedural economy, which allows the selection of minor cases in order to investigate facts of greater relevance or, where applicable, the selection of some among several facts in order to make the investigation more efficient and achieve the imposition of a penalty in cases of complex crime”… “…if the conditions or criteria authorizing the application of the principle of opportunity are set out in the criminal or criminal procedure rules, we are in the presence of the regulated modality…if they are not found in the law….it will be a free principle of opportunity”9.
In light of the foregoing, whether the abbreviated procedure is considered an expression of the principle of opportunity or an independent institution that does not depend on the function of the Public Prosecutor's Office, the fact is that it is a novel alternative dispute resolution method and an important tool to encourage the regularization of reporting entities' breaches and the consequent strengthening of the prevention system.
IV.2 The calculation of charges in the opening resolution and the requirements.
Article 34 provides that cases in which a total or partial breach of the obligations established in Article 21 of Law No. 25,246 and its amendments is detected are eligible for an abbreviated procedure. All breaches, both formal and material, may be channeled through this abbreviated procedure, regardless of whether the reporting entity is a repeat offender.
As we have been arguing, the rule adopts a broad criterion as to the range of breaches that may be included in the abbreviated procedure, in order to facilitate the regularization of those situations and strengthen the PLA/FT/FP (anti-money laundering, counter-terrorist financing and counter-proliferation financing) system.
Thus, the resolution opening the proceeding must indicate the possibility of availing oneself of the abbreviated procedure and, where applicable, contain the provisional calculation of charges and the time limit for remedying the breaches detected and the deficiencies in the PLA/FT/FP system.
The calculation will be made in accordance with the following guidelines:
1. One (1) time the total value of the asset(s) or transaction(s), in cases where the infringements relate to the failure to file suspicious transaction reports or to their filing outside the time limits and forms provided for that purpose. In this sole case, the amount may be paid in up to TWO (2) equal, monthly and consecutive installments.
2. Thirty (30) modules: For each charge related to total non-compliance regarding Monitoring, Terrorist Lists, Politically Exposed Persons, Beneficial Owner, Registration and appointment of the Compliance Officer and of the Reporting Entity, Duty to Cooperate, or Enhanced Due Diligence.
3. Twenty-five (25) modules: For each charge related to partial non-compliance regarding Monitoring, Terrorist Lists, Politically Exposed Persons, Beneficial Owner, Registration and appointment of the Compliance Officer and of the Reporting Entity, Duty to Cooperate, or Enhanced Due Diligence.
4. Fifteen (15) modules or a warning: for each charge related to other breaches.
The resolution opening the proceeding will be notified to the Reporting Entity and to the members of its management body for the period of the infringement, who within ten (10) days must accept such procedure jointly, unanimously, clearly, unequivocally and unconditionally.
Together with the first filing, the Reporting Entity and the members of its management body who are parties to the proceeding, where applicable, must attach proof of payment of the calculation made and the undertaking to remedy the breaches detected within three (3) months from the notice of the Resolution opening the proceeding, by means of a filing made by the respondents together with an Independent External Reviewer10. Such acceptance implies acknowledgment of the breaches detected.
Once compliance has been verified and the three (3) month period provided for remedying the breaches detected has elapsed, the Directorate of Administrative Sanctioning Regime will forward the file for the issuance of the Final Resolution concluding the procedure and ordering its registration and archiving.
Such Final Resolution will not create a record nor may it be counted for purposes of repeat offending, provided that no infringement is committed again within five (5) years from the issuance of the Final Resolution.
If the Directorate of Administrative Sanctioning Regime verifies non-payment, or, where applicable with the intervention of the Directorate of Supervision, it is established that the breaches detected have not been remedied, it will issue a report and forward the file so that the President of the UIF may issue the Final Resolution under Article 30 of these regulations.
If the respondent(s) has/have made the payment and has/have not remedied the breaches within the established time limit, the payment will be considered as made on account of whatever is ultimately due in the event a fine is imposed.
V.- Application to pending administrative proceedings.
Article 2 of Resolution 129/2024 provides that the Abbreviated Procedure in force will also apply to those proceedings in which a request has already been made to avail oneself of the Abbreviated Procedure approved by UIF Resolution No. 90/2024.
Likewise, the Annex to Resolution 129/2024 provides for two transitional clauses for pending proceedings so that they may also use the new abbreviated procedure.
VI. 1. First transitional clause.
The first transitional clause provides, for pending proceedings predating the amendment made by Law 27,739, that the calculation will be made on the following terms:
1. One (1) time the total value of the asset(s) or transaction(s), in cases where the infringements relate to the failure to file suspicious transaction reports or to their filing outside the time limits and forms provided for that purpose. In this sole case, the amount may be paid in up to two (2) equal, monthly and consecutive installments.
2. Up to seventy thousand pesos ($70,000): For each charge related to total non-compliance regarding Monitoring, Terrorist Lists, Politically Exposed Persons, Beneficial Owner, Registration and appointment of the Compliance Officer and of the Reporting Entity, Duty to Cooperate, or Enhanced Due Diligence.
3. Up to fifty thousand pesos ($50,000): For each charge related to partial non-compliance regarding Monitoring, Terrorist Lists, Politically Exposed Persons, Beneficial Owner, Registration and Appointment of the Compliance Officer and of the Reporting Entity, Duty to Cooperate, or Enhanced Due Diligence.
4. Up to thirty thousand pesos ($30,000): for each charge related to other breaches.
VI. 2. First transitional clause.
The second transitional clause applies the new rule to the remaining proceedings pending prior to the publication of this Resolution 129/2024. In this regard, it provides that respondents have a period of 90 days from legal publication to request that the calculation be made in accordance with transitional clause 1. The calculation made will be notified to the respondents, where applicable, who within ten (10) days must accept it jointly, unanimously, clearly, unequivocally and unconditionally.
Together with the acceptance, the Reporting Entity and the members of its management body who are respondents, where applicable, must attach proof of payment of the calculation made or, in the case of charges under Article 21(b) of Law No. 25,246 and its amendments, of the first installment of the calculation, and the undertaking to remedy the breaches and deficiencies detected in their PLA/FT/FP systems within three (3) months from the notice of said calculation, by means of a filing made by the respondents together with an Independent External Reviewer, in accordance with Articles 37 and 38 of these regulations. Such acceptance implies acknowledgment of the breaches detected.
Once the foregoing has been verified, the Directorate of Administrative Sanctioning Regime will forward the file for the issuance of the Final Resolution concluding the procedure, so that it is registered and archived.
If the investigating officer verifies non-payment, or, where applicable with the intervention of the Directorate of Supervision, it is established that the breaches detected have not been remedied, the file will proceed to the preparation of the Final Report without further formality.
If the respondent(s) has/have made the payment and has/have not remedied the breaches within the established time limit, the payment will be considered as made on account of whatever is ultimately due in the event a fine is imposed.
VI.- Conclusion
The procedural reform has provided the respondent with the option of accepting a monetary calculation or a warning and remedying the misconduct detected. In this way, no record will be created against it, since it will not be sanctioned.
In this way, the FATF requirement of effectiveness, proportionality and dissuasiveness regarding the sanctions imposed by the UIF is better met, by giving the respondent the possibility of acknowledging the breach, complying with the calculation and remedying the breach and the harm to the prevention system, quickly and close in time to the supervision in which the breach was detected.
This alternative to the ordinary procedure will be available for all breaches, both formal and substantive, bringing efficiency to the system in the fulfillment of duties by reporting entities.
For pending proceedings, the deadline that has been set of 90 business days to request the application of the abbreviated procedure and the calculation in accordance with the second transitional clause will be important, since after that point the option will no longer be available.
General information only. This is not professional advice on any particular case.