Law No. 27693 Creating the Financial Intelligence Unit - Peru

LAW NO. 27693

THE PRESIDENT OF THE REPUBLIC

WHEREAS:

The Congress of the Republic has enacted the following Law:

THE CONGRESS OF THE REPUBLIC;

Has enacted the following Law:

LAW CREATING THE FINANCIAL INTELLIGENCE UNIT - PERU

Article 1st.- Object of the Financial Intelligence Unit The Financial Intelligence Unit, also referred to as the UIF, is hereby created, with legal personality of Public Law, with functional, technical, and administrative autonomy, charged with the analysis, processing, and transmission of information to prevent and detect money or asset laundering, with a budgetary section attached to the Ministry of Economy and Finance.

Article 2nd.- Economic Resources of the UIF The resources that finance the activities of the UIF are:

1. Transfers made by the Ministry of Economy and Finance.
2. State-to-state donations.
3. Aid coming from international agreements.
4. 10% of the assets seized by the State resulting from investigations and complaints by the UIF, after the respective legal actions have concluded.

Article 3rd.- Functions of the UIF The Financial Intelligence Unit has the following functions:

1. It is responsible for requesting, receiving, and analyzing information on suspicious transactions presented to it by subjects obligated to report under this Law.
2. It is responsible for requesting the expansion of the aforementioned information with proper justification, receiving, and analyzing Transaction Records.
3. It is authorized to request from persons obligated under this Law the information it deems relevant for the prevention and analysis of money or asset laundering.
4. It is responsible for communicating to the Public Ministry those transactions that, after respective investigation and analysis, are presumed to be linked to money or asset laundering activities, so that proceedings may proceed according to law.

Article 4th.- Advisory Council The UIF has an Advisory Council, with the purpose of carrying out adequate coordination work in the elaboration of strategies, policies, and procedures for the prevention of money or asset laundering, as well as to address cases that the Executive Director of said Unit considers necessary to submit to its opinion, and it is constituted by:

1. A representative of the Superintendence of Banking and Insurance, who shall preside.
2. A representative of the Public Ministry.
3. A representative of the National Superintendence of Tax Administration (SUNAT).
4. A representative of Customs.
5. A representative of the National Commission for the Supervision of Companies and Securities (CONASEV).

The Executive Director acts as secretary. Representatives of other Control Bodies may also integrate this body, insofar as there are natural and/or legal persons subject to their supervision that, by being created, report information for the prevention of money or asset laundering to the UIF, as well as representatives of other bodies whose participation is necessary for its purposes, as established in the corresponding Regulation. The members of the Advisory Council are designated by the highest-ranking body of the entity they represent.

Article 5th.- The Executive Directorate The Executive Directorate is headed by the Executive Director, who directs and administers the UIF, is the holder of the UIF's budgetary section, is obliged to report the Unit's acts to the Minister of Economy and Finance. On behalf of the UIF, he communicates to the Public Ministry cases that are presumed to be linked to money or asset laundering activities. The Executive Director is appointed by the National Superintendent of Banking and Insurance and holds the position for a period of 3 (three) years, and may be appointed for one more period. He will continue in office until his successor is appointed.

Article 6th.- Staff of the UIF The technical team of the UIF is composed of a group of people who, like the Executive Director, must have moral solvency, proven training, and experience in banking operations, related fields, or in the investigation of financial crimes and/or money or asset laundering. The staff is subject to the private sector labor regime. The position of Executive Director and the staff of the UIF are incompatible with the performance of any other professional or technical activity, public or private, in accordance with Law No. 27588, Article 2nd, except for teaching.

Article 7th.- Administrative Structure of the UIF The administrative structure of the UIF starts from the Executive Directorate, whose complementary functions and those of the rest of the UIF staff will be established in the Regulation. The grounds for revocation and removal will be established in the Regulation.

Article 8th.- Subjects Obligated to Report The following natural or legal persons are obligated to provide the information referred to in Article 3rd of this Law:

1. Companies of the financial system and the insurance system and others included in Articles 16th and 17th of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendence of Banking and Insurance, Law No. 26702.
2. Credit and/or debit card issuing companies.
3. Savings and Credit Cooperatives.
4. Trustees or administrators of assets, fiduciary trusts.
5. Stockbroker companies and securities intermediary companies.
6. Mutual fund management companies, investment funds, collective funds, and pension funds/insurance.
7. The Stock Exchange, other centralized trading mechanisms, and institutions for the clearing and settlement of securities.
8. The Commodities Exchange.
9. Companies or natural persons dedicated to the purchase and sale of automobiles, vessels, and aircraft.
10. Companies or natural persons dedicated to the construction and real estate activities.
11. Casinos, lottery companies, and game houses, including bingo halls, racetracks, and their agencies.
12. General warehouses for deposits.
13. Customs agencies.
14. Companies that allow suspicious transactions to be carried out through their computer programs and systems.

Likewise, natural or legal persons dedicated to the following activities are obligated to report to the UIF, with respect to suspicious transactions and transactions according to the amount fixed by the Regulation:

15. The purchase and sale of foreign currency.
16. The mail and courier service.
17. The trade in antiques.
18. The trade in jewelry, metals, and precious stones, coins, art objects, and postage stamps.
19. Loans and pawnshops.
20. Travel and tourism agencies, hotels, and restaurants.
21. Public Notaries.
22. Legal persons that receive donations or contributions from third parties.
23. Dispatchers of import and export operations.
24. Safe deposit box and consignation services, which will be opened with the authorization of their holder or by judicial mandate.

Likewise, the following are obligated to provide information when required for analysis purposes:

25. The National Superintendence of Tax Administration.
26. Customs.
27. The National Securities Supervisory Commission.
28. The Public Registries.
29. Public or Private Risk Central Registries.
30. The National Registry of Identification and Civil Status.

By supreme decree, countersigned by the President of the Council of Ministers and the Minister of Economy and Finance, the list of natural or legal persons obligated to provide the information established in this article will be expanded.

Article 9th.- Transaction Records Transactions for the purposes of this Law will be subject to the following rules:

1. Subjects obligated to report, in accordance with this Law, must register each transaction that exceeds the amount established in the Regulation regarding the following concepts: a) Cash deposits: in checking accounts, savings accounts, fixed-term accounts, and other term modalities. b) Deposits constituted with securities, computed according to their closing quotation value on the day prior to the deposit. c) Placement of debentures and other debt securities issued by the entity itself. d) Purchase and sale of securities - public or private - or shares of common investment funds. e) Purchase and sale of precious metals (gold, silver, platinum). f) Cash purchase and sale of foreign currency. g) Issued and received drafts or transfers (internal and external) regardless of the form used to process the operations and their destination (deposits, swaps, purchase and sale of securities, etc.). h) Purchase and sale of checks drawn against accounts abroad and traveler's checks. i) Import shipments. j) Collection of exports. k) Sale of the financial entity's portfolio to third parties. l) Loan amortization services. m) Early loan cancellations. n) Constitution of trusts and all types of other fiduciary trusts. o) Purchase and sale of goods and services. p) Forward transactions agreed upon with clients. q) Other operations or transactions considered important as established by the Regulation.

2. The characteristics of the record will be specified in the corresponding Regulation and must contain, at least, regarding each transaction, the following: a) The identity and domicile of their regular or non-regular clients, accredited by presenting the document at the time of establishing commercial relations and, primarily, when making a transaction, as provided in this article. For these purposes, the identity, representation, domicile, legal capacity, occupation, and corporate purpose of legal persons must be registered and verified by reliable means, as well as any other information regarding their identity, through documents such as National Identity Document, passport, birth certificate, driver's license, articles of incorporation, statutes, or any other official or private documents, regarding the identity and specific details of their clients. Obligated subjects must adopt reasonable measures to obtain, register, and update information on the true identity of their clients, regular or not, and the commercial transactions referred to in this article. b) Description of the type of transaction, amount, currency, account(s) involved when applicable, place(s) where the transaction was carried out, and date. c) Any other information required by the Financial Intelligence Unit.

3. The record must be kept accurately and completely by the obligated subjects on the day the transaction occurred and will be preserved for 10 (ten) years from the date thereof, using for this purpose computerized means, microfilming, or similar means, the record being kept in a medium of easy recovery, with a backup copy to be formed at the end of each quarter, which will be compiled in five-year periods. The backup copy of the last five-year period will be available to the UIF and the Public Ministry within 48 business hours of being requested.

4. The obligation to report transactions will not apply when it concerns regular clients under the responsibility of those obligated to register, and regarding which the obligated subjects have sufficient and duly justified knowledge of the legality of their activities, prior to evaluation and periodic review by the Compliance Officer and the person who reports to him.

5. Multiple transactions that together exceed a certain amount according to the Regulation will be considered as a single transaction if they are carried out by or for the benefit of a specific person during a day, or in any other term established by the corresponding Regulation. In such cases, when the obligated subjects or their employees have knowledge of the transactions, they must carry out the registration established in this article: a) The records must be available to judicial bodies or the competent authority, according to law. b) The UIF, when it deems it convenient and within the term it fixes, may establish that the persons obligated to report, referred to in Article 8th, provide it with information regarding the transaction record. c) Obligated persons who have computerized means may give their consent for their interconnection with those of the UIF to facilitate and expedite the information capture process. d) In transactions carried out on their own account between companies subject to the supervision of the Superintendence of Banking and Insurance, the registration referred to in this article is not required.

Article 10th.- Supervision of the Prevention System The supervisory bodies indicated in paragraphs 1, 2, and 3 of this article must exercise their function in accordance with what is provided in the Regulation of this Law and their own supervision mechanisms, which must specifically consider the responsibilities and scope of the report of the Compliance Officer, Internal Audit, and External Audit, respectively, as well as the responsibilities of directors and managers in order to establish the existence of inexcusable negligence in the event of non-compliance with these. To fulfill their supervision functions, they will be supported by the following agents:

1. Compliance Officer. The Board of Directors of legal persons or companies of the financial system, insurance, stock market, credit card issuers, mutual funds, investment funds, collective funds, pension funds, fund transfer, and cash transport companies, must appoint an official at the manager level designated as Compliance Officer on an exclusive basis, who will be in charge of monitoring compliance with the prevention system within the company and reporting directly to the Board of Directors or the Executive Committee of their company, assigning negligible resources and infrastructure for the fulfillment of their responsibilities. The other companies or obligated persons that, due to the size of the organization, complexity, and volume of transactions, do not justify having an official on an exclusive basis, will appoint an executive at the management level to assume these responsibilities. The Regulation will indicate the obligated persons who do not require full integration into the prevention system. In addition to the internal auditor, those persons who have been declared bankrupt, convicted of intentional crimes, or are subject to the other impediments indicated in Article 365th of Law No. 26702, cannot be compliance officers. The Compliance Officer will issue a semi-annual report on the functioning of the money or asset laundering prevention system.
2. Internal Audit, will formulate an annual special audit plan of the money or asset laundering prevention program, oriented to improve the internal control system for prevention. The result of the applied examinations must be included as an annex to the Compliance Officer's report.
3. Independent or External Audit, will issue a special report that has its own purpose, not complementary to the annual financial report, which must be carried out by an auditing company different from the one that issues the annual financial statements report or by an independent auditor different from this, as established by the Regulation.
4. Superintendence of Banking and Insurance and AFPs, will issue reports related to the topic of money or asset laundering, when through the relationships of their supervision functions they detect the presumption of money or asset laundering.

Article 11th.- Duty to Communicate and Report Suspicious and Unusual Transactions Subjects obligated to communicate and report must pay special attention to suspicious and unusual transactions carried out or attempted to be carried out, for which effect the UIF may provide from time to time additional information or criteria to those indicated in this Law and its Regulation. The Regulation of this Law will establish the detail and scope of independent compliance reports in relation to the obligated subjects. For the purposes of this Law, it is understood by:

a) Suspicious transactions, those of a civil, commercial, or financial nature that have an unusual magnitude or speed of rotation, or conditions of unusual or unjustified complexity, which are presumed to proceed from some illicit activity, or that, for any reason, do not have an apparent economic or lawful basis; and b) Unusual transactions, those whose amount, characteristics, and periodicity do not relate to the client's economic activity, fall outside the parameters of normality current in the market, or do not have an evident legal basis.

The Regulation will establish new modalities of suspicious and unusual transactions that arise.

Article 12th.- Duty of Confidentiality Obligated subjects, as well as their employees, who report to the UIF on the transactions described in the previous articles, cannot make known to anyone, except to a judicial body or competent authority or another person authorized, according to legal provisions, the fact that information has been requested or provided to the UIF, in accordance with this Law, under legal responsibility. This provision also applies to the members of the Advisory Council, the Executive Director, and the rest of the UIF staff.

Article 13th.- Exemption of Liability of Officials Subjects obligated by this Law, their workers, directors, and other representatives authorized by legislation, are exempt from criminal, legal, or administrative liability, as appropriate, for compliance with this Law or for the revelation of information whose restriction is established by contract or emanates from any other legislative, regulatory, or administrative provision, regardless of the result of the communication. This provision is extended to all members of the UIF, who act in the fulfillment of their functions.

Article 14th.- Customer Knowledge, Correspondent Banking, Staff, and Market Persons obligated to report to the UIF must:

1. Implement prevention mechanisms for the detection of unusual and suspicious transactions that allow achieving sufficient and updated knowledge of their clients, correspondent banking, and their staff.
2. The procedures of the prevention program must be documented in a money or asset laundering prevention manual.
3. The mechanisms must be based on adequate knowledge of the financial, stock market, and commercial market, with the purpose of determining the usual characteristics of transactions carried out regarding certain products and services, and thus be able to compare them with the transactions carried out through them.

Article 15th.- Information Exchange The UIF may collaborate or exchange information with competent authorities of other countries that exercise analogous competencies, within the framework of international agreements and conventions signed in the matter of money or asset laundering. Collaboration and information exchange with competent authorities of other countries will be conditioned to what is provided in international treaties and conventions and, if applicable, to the general principle of reciprocity and to the submission by the authorities of said countries to the same obligations regarding professional secrecy that govern for the nationals.

Article 16th.- Liability of Obligated Subjects to Report Obligated subjects are responsible, according to law, for the acts of their employees, officials, directors, and other authorized representatives who, acting on their behalf, fail to comply with the provisions established in this Law.

Article 17th.- Liaison Officers The UIF will have the support of liaison officers designated by the heads of the Superintendence of Banking and Insurance, the Public Ministry, the National Superintendence of Tax Administration, Customs, the National Commission for the Supervision of Companies and Securities, and the Ministry of the Interior. The function of these liaison officers will be the consultation and coordination of activities of the UIF with those of the bodies of origin to which they belong.

COMPLEMENTARY, TRANSITORY, AND FINAL PROVISIONS

First.- Substitution of Articles 140th, 376th, and 378th of Law No. 26702 The text of Articles 140th, 376th paragraph 1, second paragraph, and 378th, paragraphs 2 and 3 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendence of Banking and Insurance, Law No. 26702 and its modifications, is substituted in the following terms:

“Article 140th.- SCOPE OF THE PROHIBITION It is prohibited for companies of the financial system, as well as their directors and workers, to supply any information on passive operations with their clients, unless there is written authorization from them or it concerns the cases set forth in Articles 142nd and 143rd. They are also obliged to observe bank secrecy:

1. The Superintendent and the workers of the Superintendence, except when it concerns information regarding holders of checking accounts closed due to the issuance of checks without sufficient funds.
2. The directors and workers of the Central Reserve Bank of Peru.
3. The directors and workers of auditing companies and risk classification companies.

This rule does not apply to suspicious movements of money or asset laundering, referred to in Section Fifth of this Law, in which case the company is obliged to communicate such movements to the Financial Intelligence Unit. The company and/or its workers do not incur legal responsibility when, in compliance with the obligation contained in this article, they make known to the Financial Intelligence Unit suspicious movements or transactions that, by their nature, may hide money laundering or asset operations. The corresponding authority initiates the necessary investigations, and in no case, such communication can be the basis for the filing of civil, criminal, and indemnity actions against the company and/or its officials. Nor do those incur responsibility who abstain from providing information subject to bank secrecy to persons other than those referred to in Article 143rd. Authorities that persist in requesting it are subject to the crime of abuse of authority typified in Article 376th of the Penal Code.

Article 376th.- AVAILABILITY OF RECORD

1. (...) (2nd Paragraph) Companies of the financial system cannot make known to anyone, except a Tribunal, competent authority, Financial Intelligence Unit, or another person authorized by legal provisions, the fact that information has been requested or provided to a Tribunal, Financial Intelligence Unit, or competent authority.

Article 378th.- COMMUNICATION OF SUSPICIOUS FINANCIAL TRANSACTIONS (...) 2. When suspecting that the transactions described in paragraph 1 of this article could constitute or be related to illicit activities, the

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