Money laundering and terrorist financing
Banco de Portugal acts in the field of prevention of money laundering and terrorist financing (ML/TF).
The Bank conducts the preventive supervision of ML/TF of credit institutions, financial companies, payment institutions, electronic money institutions, branches established in Portugal and entities providing postal services as well as financial services.
Supervised institutions are required to comply with several duties such as, (i) customer identification and due diligence, (ii) duty to keep documents and records on customers and operations, (iii) scrutiny and reporting of suspicious operations and (iv) adoption and implementation of internal control systems that are adequate to the ML/TF risk intrinsic to each institution.
In addition to providing for compliance with these duties, Banco de Portugal has regulatory functions and actively participates in the preparation of the legal framework governing ML/TF.
Banco de Portugal is also represented in national and international bodies dealing with these issues, among which the AML/CFT Coordination Committee and the Financial Action Task Force (FATF).
Money laundering is the process through which the authors of criminal activities conceal the true source of the property and revenue (benefits) obtained by illicit means, transforming the liquidity from such activities into legally reusable money, by disguising the origin and true owner of the funds.
Money laundering may encompass three phases:
- Placement: property and revenues are placed in financial and non-financial circuits, for instance through deposits in financial institutions or investments in profitable activities and high-value goods;
- Circulation: property and revenues are used in multiple and repeated operations (for instance, transfers of funds), with the purpose of obscuring the money trail, eliminating any trace of its source and property;
- Integration: recycled goods and revenues are reintroduced in the legitimate economic circuits, through their utilisation in the purchase of goods and services.
According to Portuguese law, money laundering is a crime - Article 368-A of the Portuguese Penal Code (in Portuguese only).
In articulation with the legal framework for the prevention of money laundering, legislative measures were adopted to make it easier to detect, prevent and suppress terrorist financing, reducing the possibility of access to the international financial system by the persons who commit terrorist acts, terrorist organisations and groups, and their sponsors.
These measures include, inter alia, the freezing and seizure of the assets belonging to terrorists and those supporting and sponsoring terrorist organisations and groups, the duty to report transactions suspicious of having any type of connection with terrorist activities, the strengthening of the duties to prevent money laundering (in particular, the identification duty) within the scope of operations involving the transfer of funds and criminalising terrorist financing.
In accordance with Portuguese law, terrorist financing is considered a criminal offence, by virtue of the provisions laid down in Article 5-A of Law No 52/2003 of 22 August 2003(in Portuguese only).
The AML/CFT Coordination Committee monitors and coordinates identification, assessment and response to the ML/TF risks to which Portugal is or will possibly be exposed, contributing to a continuous improvement of the technical conformity and efficiency of the domestic AML/CFT system.
The existence of an authority or mechanism to coordinate domestic policies to combat ML/TF is an imperative since the revision of the FATF Recommendations in 2012 and the publication of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 (Article 7).
The Coordination Committee is dependent on the Ministry of Finance. It is chaired by a Secretary of State, appointed by the Government member responsible for Finance, and is composed of the following persons and entities:
- Ministry of Finance
- Ministry of Foreign Affairs
- Ministry of Internal Administration
- Ministry of Justice
- Ministry of Economy
- Ministry of Labour, Solidarity and Social Security
- Attorney General’s Office
- Secretary General of the Internal Security System
- Criminal Police
- National Republican Guard
- Public Security Police
- Security Information Service of the Portuguese Republic’s Information System
- Banco de Portugal
- Portuguese Securities Market Commission
- Insurance and Pension Funds Supervisory Authority
- Economy and Food Safety Authority
- Institute of Registration and Notary Affairs
- Institute of Public Markets, Real Estate and Construction
- Gambling Inspection and Regulation Service of Turismo de Portugal, I. P.
- Tax and Customs Authority
- Bar Association
- Portuguese Institute of Statutory Auditors
- Portuguese Order of Chartered Accountants
- Chamber of Solicitadores and Enforcement Officers
- FATF Delegation Coordinator