Money laundering and terrorist financing
Banco de Portugal is responsible for the preventive supervision of money laundering and terrorist financing (ML/TF) in the financial sector, primarily ensuring that financial institutions comply with the following:
- Customer identification and customer due diligence;
- Obligation to issue suspicious transaction reports;
- Obligation to refrain from carrying out transactions;
- Obligation to refuse to carry out transactions;
- Obligation to keep documents and records;
- Obligation of scrutiny;
- Obligation to cooperate;
- Obligation of non-disclosure;
- Obligation to train staff;
Banco de Portugal also checks whether financial entities adopt the means and mechanisms necessary to ensure compliance with the restrictive measures.
In addition to its supervisory tasks, Banco de Portugal has regulatory functions and actively participates in the preparation of the legal framework governing the prevention of ML/TF. The Bank is also 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).
Within the applicable legal framework, the following are paramount:
Law No 83/2017 of 18 August 2017, which sets forth preventive and repressive measures to combat money laundering and terrorist financing.
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 money laundering and terrorist financing.
Law No 97/2017 of 23 August 2017, which governs the application and execution of the restrictive measures approved by the United Nations or by the European Union and sets forth the sanctions applicable to breaches of such measures.
Notice of Banco de Portugal No 2/2018 of 26 September 2018, which governs enforcement conditions, procedures, instruments, mechanisms, enforcement measures, reporting obligations and other aspects necessary for ensuring compliance with obligations for the prevention of money laundering and terrorist financing, within the activities of financial entities subject to the Bank's supervision, as well as the means and mechanisms necessary for such entities to comply with the duties enshrined in Law No 97/2017, and also the measures that payment service providers must adopt to detect transfers of funds with missing or incomplete information on the payer or payee.
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 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.
This Committee was set up by Council of Ministers Resolution No 88/2015 of 1 October 2015 and is dependent on 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 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