Money laundering and terrorist financing
The Banco de Portugal is the competent authority for verifying compliance by entities subject to its supervision with obligations established for the prevention of money laundering and terrorist financing (ML/TF) laid down in Law No 83/2017, of 18 August 2017 and in supplementary legislation and regulations.
The Banco de Portugal also checks whether the entities subject to its supervision adopt the means and mechanisms necessary to ensure compliance with restrictive measures approved by the United Nations or the European Union, pursuant to Law No 97/2017 of 23 August 2017.
Since 2020, the Banco de Portugal has also been the Portuguese competent authority responsible for registering entities intending to act as virtual assets service providers and verifying their compliance with the legal and regulatory provisions governing the prevention of ML/TF.
In addition to its supervisory tasks, the Banco de Portugal also has regulatory powers. In particular, the Bank is involved in drawing up the national and international legal framework governing the prevention of ML/TF, producing sectoral regulations and issuing guidelines and recommendations to the sector.
The Bank is represented in national and international bodies dealing with these issues, among which the AML/CFT Coordination Committee, the European Banking Authority (EBA) and the Financial Action Task Force (FATF).
ML/TF supervisory strategy
In line with the applicable legal framework, the Banco de Portugal adopts a risk-based supervisory strategy for ML/TF, which involves:
- Cross-cutting and thematic inspections;
- Analysing regular reports submitted by supervised entities;
- Analysing compliance with previously issued supervisory measures;
- Carrying out sectoral and sub-sectoral risk assessments;
- Analysing ML/TF prevention criteria in market entry processes, including authorisation and registration procedures and fit and proper assessments of members of corporate bodies and holders of qualifying holdings;
- Investigating potential infringements of ML/TF prevention rules;
- Responding to requests for information from the sector, its counterparts and the general public.
To address the shortcomings identified in ML/TF supervision, Banco de Portugal issues recommendations, specific orders or other corrective measures. In terms of sanctions, failure to comply with the legal framework may result in administrative sanctioning proceedings.
The Banco de Portugal’s Annual Report – Activity and Financial Statements, which include detailed information on the tasks carried out by the supervisor each year – including in terms of ML/TF prevention – are available here.
Legislation and regulations
Within the applicable legal framework for the prevention and supervision of ML/TF, the following are paramount:
- Law No 83/2017 of 18 August 2017, which sets forth preventive and repressive measures to combat ML/TF;
- Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on the information on payers and payees, accompanying transfers of funds in any currency for the purposes of preventing, detecting and investigating M/TF;
- Law No 97/2017 of 23 August 2017, governing the application and execution of the restrictive measures approved by the United Nations or by the European Union and setting forth the sanctions applicable to breaches of such measures;
- Notice of the Banco de Portugal No 3/2021 of 23 April 2021, governing the registration process with the Banco de Portugal as applicable to entities operating with virtual assets, provided for in Article 112-A of Law No 83/2017 of 18 August 2017;
- Notice of the Banco de Portugal No 1/2022 of 6 June 2022, setting out the necessary aspects to ensure compliance with the obligation to prevent ML/TF, within the activity of the financial entities subject to supervision by the Banco de Portugal;
- Notice of the Banco de Portugal No 1/2023 of 24 January 2023, setting out the necessary aspects to ensure compliance with the obligation to prevent ML/TF, within the activity of operating with virtual assets.
The AML/CFT Coordination Committee monitors and coordinates identification, assessment and response to ML/TF risks to which Portugal is or may possibly be exposed, contributing to a continuous improvement of the technical conformity and efficiency of the domestic AML/CFT system.
This Committee was set up by Council of Ministers Resolution No 88/2015 of 1 October 2015 and is under the auspices of the Ministry of Finance.
The Coordination Committee 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 Home Affairs
- Ministry of Justice
- Ministry of the Economy
- Ministry of Labour, Solidarity and Social Security
- Prosecutor General’s Office
- Secretary General of the Internal Security System
- Criminal Police
- National Republican Guard
- Public Security Police
- Internal Intelligence Service of the Portuguese Intelligence System
- Banco de Portugal
- Portuguese Securities Market Commission
- Insurance and Pension Funds Supervisory Authority
- Economic and Food Safety Authority
- Institute of Registries and Notary
- Institute of Public Markets, Real Estate and Construction
- Gambling Inspection and Regulation Service of Turismo de Portugal, I. P.
- Tax and Customs Authority
- Portuguese Bar Association
- Professional accountancy organization for statutory auditors and statutory audit firms
- Portuguese Chartered Accountants Association
- Solicitors and Enforcement Agents National Association
- Head of the Portuguese Delegation to the FATF
Money laundering is the process through which criminals seek to conceal the true source of property or income (benefits) obtained illicitly, and by disguising the origin or the actual owner of the funds, legitimise those proceeds.
Money laundering can comprise three stages:
Placement: property and proceeds are introduced in financial and non-financial circuits, for instance through deposits in financial institutions or investments in profitable activities and high-value goods;
Layering: illicit proceeds are separated from their criminal source through complex layers of financial operations and transactions to obscure the audit trail, eliminating any trace of their source and ownership;
Integration: laundered revenues are reintroduced into the legitimate economy, through their use in the purchase of goods and services.
According to Portuguese law, money laundering constitutes a crime as set out in Article 368-A of the Portuguese Criminal Code.
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 the financing of terrorism, reducing the possibility of access to the international financial system by persons who commit terrorist acts, terrorist organisations and groups, and their sponsors.
These measures include freezing and the 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, 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 the financing of terrorism.
According to Portuguese law, terrorist financing is considered a separate offence as set out in Article 5-A of Law No 52/2003 of 22 August 2003.