Argentine Central Bank's Power Confirmed To Regulate And Sanction Money- Laundering And Terrorism Financing

Author:Mr Roberto Silva, Jr., Francisco Abeal and Agustin Lopez Roualdes
Profession:Marval O'Farrell & Mairal
 
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On December 13, 2016, Tribunal V of the Federal Administrative Court of Appeals confirmed Resolution No. 721 issued by the Superintendent of Financial and Exchange Institutions of the Central Bank of the Argentine Republic, which fined Banco de Galicia y Buenos Aires S.A. and the members of its Board of Directors for a total of AR$1,353,000, for infractions to the “know your customer” policy implemented by Communiqué “A” 3094.

Tribunal V of the Federal Administrative Court of Appeals, in re: “Banco Galicia y Buenos Aires S.A. y Otros c/ Banco Central de la República Argentina s/ Entidades Financieras - Ley 21.526 - Art. 42” confirmed Resolution No. 721 dated October 10, 2013 (the “Resolution”) issued by the Central Bank of the Argentine Republic (the “Central Bank”), thus upholding the fines imposed by such entity on the Banco de Galicia y Buenos Aires S.A. (“Galicia”) and the members of its Board of Directors for a total amount of AR$1,353,000.

At the time of imposing the fines, the Central Bank considered that Banco Galicia had breached its duty to implement appropriate “know your customer” policies regarding Messrs. Huei Chi Wen and Yen Ting Wen, both customers of Banco Galicia, as it did not hold customer profiles for the abovementioned customers when such were requested by the Central Bank, as per # 1.1.1.1. of Communiqué “A” 3044 (the “Communiqué”).

Banco Galicia and the members of its Board of Directors appealed the Resolution. They argued that the Central Bank lacked the power to establish sanctions in matters related to money-laundering and terrorism financing which were exclusively attributed to the Financial Information Unit (Unidad de Información Financiera, “UIF”) through Law No. 25,246  Moreover, Banco Galicia argued that such powers are not considered in the Central Bank's By-Laws. Banco Galicia further stated that the alleged infractions (occurred between 2001 and 2005) have lapsed under the applicable statute of limitations. Regarding the customer files, Banco Galicia stated that they were made by the customer's previous bank, which was later acquired by Banco Galicia. Additionally, they argued that the members of the Board of Directors had no responsibility on the basis of their lack of involvement in the process. Finally, Banco Galicia maintained that the fines applied were excessive and arbitrary, due to the Central Bank's lack of grounds in setting the amounts.

Upon confirming the Resolution, Tribunal...

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