National anti-money laundering and financing of terrorism plan (AML/CFT)
By Holbert Ledesma, GRLAFT Compliance Office for Financiera Confianza
The National Anti-Money Laundering and Financing of Terrorism Plan was drawn up and approved collectively by 21 public institutions and 21 entities from the private sector in 2011; an inter-institutional effort lead by the Directorate General of Banking, Insurance & Pension Funds (hereinafter, SBS) with the technical assistance of the International Monetary Fund (hereinafter, IMF).
The starting point for the plan was an analysis of the principal threats and weakness in Money Laundering and Financing of Terrorism (AML/CFT) matters that Peru faced at that time, allowing this instrument to tackle these weaknesses (between structural and functions), in order to off-set the risk of AML/CFT. The definition of the objectives and actions was based on the functional weaknesses identified by each of the constitutive components: prevention, detection and criminal repression.
The current National Plan 2018-2021, enacted by Supreme Decree N° 003-2018-JUS, follows the path embarked upon in 2011 and it is set out as a short and medium-term planning component that is developed within the scope of the first National Policy in this area. The proposal was approved by the Multi-Sectoral Executive Commission on Anti-Money Laundering and Financing of Terrorism (hereinafter, CONTRALAFT) and by the executive in 2017.
The National Plan acts as an instrument for implementing the National Anti-Money Laundering and Financing of Terrorism Plan.
Based on the National Policy approved by CONTRALAFT in March 2017, which rests mainly on the National AML/FT Risk Assessment (2016), a participative process was initiated to draw up the current National Plan, in order to define specific objectives, concrete actions, parties responsible for its implementation and key performance indicators over a timeline, also taking into consideration the actions of the National Plan in effect but pending implementation and which, pursuant to the new risk scenario identified, were still necessary to tackle.
Participative process for drawing up the Plan
The National Plan is the result of a participative process in which a range of public entities have intervened. The methodology used in the process of drawing up the National Plan is based on three fundamental aspects:
- The specific objectives and the lines of the National Policy
- The conclusions and recommendations of the National AML/FT Risk Assessment (2016) and the Sectoral Assessments of Exposure to AML/FT Risk of the mining and fishing sectors (2016) and
- The active participation of the public bodies that play a fundamental role in preventing, detecting, investigating and taking disciplinary proceedings against money laundering and the financing of terrorism in the country (whether or not they are members of CONTRALAFT) in all stages of its drafting.
The different stages in drawing up the National Plan were as follows:
- Stage I: Setting up working groups. The contributions and discussions that have given rise to the final wording of the National Plan were organised as the main form of participation, via 21 public entities. They were distributed in three working groups:
- Prevention Working Group
- Investigation Detection Working Group
- Prosecution and Criminal Repression Working Group
- Stage II: Filling out templates. The “Templates for obtaining Information” were distributed among the members of the Working Groups, with a view to identifying concrete actions to mitigate the risks identified in the National Risk Assessment. Each member of the 3 Working Groups completed and handed in the templates, which contained the following information: description of the specific actions that they considered addressing; reasons for their implementation, where details were provided on the reasons why the action was proposed.
- Stage III: Group and bilateral meetings. 19 group meetings were held, where the information collected in the “Templates for obtaining Information” was shared and KPIs were proposed for each of the actions, in which valuable contributions and comments were received. A total of 22 institutions took part in these meetings, including the German International Co-operation Group (Gesellschaft für Internationale Zusammenarbeit - GIZ).
- Stage IV: Bilateral meetings to obtain political commitment. As the SBS holds the Deputy Chairmanship and the Technical Secretariat of CONTRALAFT, the Superintendent of Banking, Insurance and Pension Funds and the Head of the Financial Intelligence Unit, hereinafter, FIU-Peru, held bilateral meetings with the authorities of different state institutions.
- Stage V: Validating actions and determining costs. All the actions, with their respective KPIs, were reviewed, based on the comments sent in by the different entities participating in the process. Working and/or co-ordination meetings were held between different entities as part of this process.
- Stage VI: Presentation and approval of the final proposal by CONTRALAFT. The draft National Plan presented during the Third Session of CONTRALAFT was approved unanimously and the Chair and the Technical Secretariat of CONTRALAFT were tasked to put it to the Executive to be enacted by Supreme Decree.
To define, plan and implement actions over the period 2018-2021, aimed at enhancing efficiency and efficacy in the prevention, detection, investigation and sanctioning of money laundering and financing terrorism in Peru.
Strategic axis N° 1: Prevention. The specific objectives and actions of this Axis form part of Specific Objective N° 1 of the National Policy: To identify and properly control activities that make money laundering and financing of terrorism possible, their lines and mandatory standards. Specific objectives:
1. Identify the AML/FT risks of the identified parties arising from the Recommendations of the International Financial Action Group, hereinafter IFAG. The main action is to promote sectoral assessments of AML/FT risk of identified parties brought to light by the recommendations of the IFAG.
2. Have a regulatory framework that allows an adequate regulation of activities prone to AML/FT risk and facilitate the identification of the final beneficiaries.
3. Strengthen regulation, supervisión and sanctions in AML/FT matters applicable to both financial and non-financial identified parties. Actions:
- Promote the planning of annual supervision in AML/FT matters with a risk-based approach.
- Define and formalise channels of communication between supervisory bodies and identified parties, aimed at receiving feedback information to improve the degree of compliance with the preventitive framework in AML/FT matters.
- Train identified parties in AML/FT matters aimed at improving their degree of compliance, with special impact on the highest risk one.
- To put in place mechanisms that enable the FIU-PERU to receive high quality reports on suspicious operations in a timely manner, along with feedback from FIU-Peru to the identified parties. Actions:
- Identify sectors with low, no or deficient quality reports to FIU-Peru, in order to orient supervision plans when appropriate.
- Approve a new formula that facilitates the reporting of suspicious operations by identified parties, including instructions in order that it is properly understood and implemented.
- Propose regulatory amendments that will allow the timely reporting of suspicious FT-related operations promote them with the Ministry of Justice and Human Rights.
- Provide identified parties with permanent and periodic information about the kinds of AML/FT and the trends that may affect them.
Strategic axis N°2: Detection. The specific objectives and actions of this Axis form part of Specific Objective Nº 2 of the National Policy: To detect and report in a timely manner AML/FT-related activities, their lines and mandatory standards. Specific objectives:
1. Improve the mechanisms and regulatory framework to guarantee the timely access of FIU-Peru and other competent authorities to confidential information. Actions:
- Promote and develop mechanisms that will make access to information protected by banking secrecy and prosecutor reserve operative for FIU-Peru.
- Propose and drive regulatory reform in Congress to allow FIU-Peru to share financial intelligence information with the National Intelligence System (SINA), The National Elections Board (JNE) and the National Electoral Process Office (ONPE).
2. Properly control the flow of illicit assets, or for illicit purposes in border areas and nationwide.
3. Facilitate the timely reporting to the competent authorities of AML/FT-related activities, safeguarding the confidentiality of the information conveyed. The main action is to draw up protocols and secure channels of communications for sending confidential information from FIU-Peru to MP and other competent authorities.
Strategic axis N° 3: Investigation and sanction. The specific objectives and actions of this Axis form part of Specific Objective N° 3 of the National Polilcy: Investigate and sanction efficiently and in a timely manner those involved in AML/FT crimes committed nationwide or internationally, its lines and mandatory standards. Specific objectives:
1. Optimise the work of the competent investigation and criminal proceedings authorities to discover and study ML/FT cases. Actions:
- Strengthen the organisational and management structure of the AML/FT human capital of the National Police of Peru, hereinafter, PNP, by means of the specialisation of its members.
- Strengthen the Specialist AML/FT Prosecutor’s Offices nationwide.
- Enhance the human capital management of the Judiciary, hereinafter, PJ by considering its specialisation in AML/FT matters and by improving security and training conditions.
- Approve a joint instrument between the MP and the PJ that allows the supporting documentation for prosecutors’ indictment to be sent to the courts in digital format.
- Re-organise the organisational structure of the PJ and the MP to create specialist money-laundering and asset forfeiture courts and prosecutors’ offices, or convert existing ones so that they exclusively hear cases of money laundering and asset forfeiture, in accordance with the case load they face.
- Put the New Criminal Proceedings Code into effect nationwide for cases of AML/FT
2. Guarantee the recovery of assets. Actions:
- Expedite the process of recording seizure and confiscation measures in public registries as a result of AML/FT processes, considering the possibility of using electronic means.
- Strengthen the technological resources and organisational and human capital management structure of the Public Prosecutor’s Office Specialising in money laundering crimes and processes of forfeiture of assets (hereinafter, PLAPD) and the Special Prosecutor’s Office for Terrorism crimes (hereinafter, PEDET), by considering an increase in manning levels, reducing their rotation and enhancing their training.
- Assign competences to PLAPD for hearing all money laundering cases, irrespective of the kind of crime that generated the illicit gains by ensuring sufficient head-count and budget and necessary security conditions to fulfil this mission.
3. Ensure adequate administration, execution and distribution of civil redress and of the assets recovered. Actions:
- Propose the amendment of Legislative Decree Nº 1104 and its regulations to optimise the enforcement of forfeiture of assets and to improve the administration and distribution of assets seized, confiscated or declared as forfeit, and promote this in Congress.
- Enact a Supreme Decree to regulate civil redress, in order to ensure its distribution among the different competent authorities.
4. Optimise international co-operation against AML/FT to enhance the work done by the police, prosecutors and courts. Actions:
- Strengthen the participation of the MP in regional networks of prosecutors’ offices to enhance international legal co-operation in AML/FT matters.
- Promote flexible international co-operation mechanisms between the PNP and their counterparts from other countries in AML/FT matters.
- Conduct studies or diagnoses of the criminal phenomenon of AML/FT in the country.
Strategic axis N° 4: Transversal: Articulation. The specific objectives and actions of this Axis form part of Specific Objective Nº 4 of National Policy: Strengthen the active and articulated participation of the State, civic society and the private sector in the fight against AML/FT, its lines and mandatory standards. Specific objectives:
1. Promote coordination between different committees and/or inter-sectoral working groups on AML/CFT and the competent authorities in these matters. The main action is to identify the inter-sectoral committees and/or working groups with AML/CFT-related competences and manage the participation of the Chairmanship of CONTRALAFT or its members in them.
2. Improve the reliable, timely and secure exchange of information in AML/FT matters among the competent public authorities and the joint work that these do. Actions:
- Drive the creation of secure mechanisms for the reliable exchange of information among prevention, investigation and sanction bodies in AML/CFT matters.
- Sign inter-institutional agreements between bodies with prudential supervisory functions over identified parties and those with competences in AML/CFT for the exchange of information.
- Generate spaces of dialogue between the AML/CFT supervisory bodies and professional associations of identified parties and promote existing ones.
- Approve and implement joint action protocols between the MP and the PJ to strengthen the AML/FT criminal proceedings. Set up Working Groups comprised of FIU Peru, PNP and MP for detecting and investigating complex AML/CFT cases.
3. Foster a culture of legality that generates a rejection of AML/CFT-related acts by the general public. Actions:
- Promote an AML/CFT culture among identified parties and roll out awareness-raising and support actions.
- Design and implement public dissemination campaigns aimed at preventing ML/FT
- Disseminate the whistle-blowing channels already in place available to the public to report possible ML/FT-related actions to the authorities.
- Put in place a mechanism that allows the general public to report alleged ML/FT-related acts to FIU-Peru, while maintaining due confidentiality.
4. Promote the intervention of the competent public bodies in the prevention and fight against AML/FT. Actions:
- Conduct a study to identify weaknesses in the capabilities (training and operational) of the players involved.
- Define articulated measures, on the basis of the results of the study, to mitigate the weaknesses identified.
- Implement and commission the Statistical Information on Money Laundering and Financing Terrorism Module on the platform of the Integral System of Crime and Law and Order Statistics of the National Institute of Statistics and Information Technology.
5. Propose and/or drive the constant upgrading of national legislation to international instruments and/or standards in the prevention and fight against AML/FT. Actions:
- Implement monitoring of compliance with international standards, as a consequence of the results of the GAFILAT (Latin American Financial Action Group) Mutual Assessment Report.
- Establish a mechanism for dialogue between the SBS and the bodies involved to drive the implementation of any changes detected as a result of monitoring compliance with international standards.
Follow-up and monitoring
CONTRALAFT is competent: “To engage in activities aimed at monitoring or the implementation of the National Anti-Money Laundering and Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction Plan and Policy”.
Against this backdrop, this National Plan specifies for each action the entity(ies) and unit(s) responsible, tasked with monitoring it and with measuring compliance against the indicators, in order to guarantee proper monitoring and follow-up.
Based on the information sent in by each responsible entity and, considering that the targets envisaged in the National Plan have been set for each year, CONTRALAFT will issue technical reports each year on the progress made in implementing the National Plan. Based on the results of these reports, and other diagnoses, it will propose an up-date of this National Plan to the Ministry of Justice and Human Rights, hereinafter, MINJUS.