Understanding Anti-Money Laundering Regulations in Ecuador

When expanding your business to Ecuador, you’ll be seeking to understand the local legal and financial regulations, and your obligations to comply with them. Ecuador’s financial system has experienced significant change in recent years as the country works towards meeting international standards and strengthening accounting practices.

One such measure Ecuador is working to strengthen is its anti-money laundering (AML) regulations. As the national economy demonstrates consistently positive growth, it has become a strong regional contender for foreign investment. Ecuador wants to continue attracting investors to its shores. It must therefore develop healthy commercial conditions to maintain and boost international business confidence.

Find out about the country’s anti-money laundering legislation and the steps you’ll need to take to comply with it.

Anti-Money Laundering in Ecuador? What is money laundering?

Money laundering is defined as the action of introducing monetary resources obtained illicitly into the legal financial system of a country. Money-laundering activity is a constant reality in monetary systems worldwide, and Ecuador is making a big push to eliminate it. Money-laundering involves making revenue from crimes such as drug and human trafficking, terrorist activities, and embezzlement.

These behaviors can occur in business in large scales. This legislation aims to reduce cases of corporate abuses of power and call out companies that demonstrate a lack of internal controls, thereby reducing opportunity for actions like embezzlement.

International Anti-Money Laundering legislation

It is important to take into account that the need to prevent this type of crime applies to businesses in all industries, and of all sizes. Strong internal processes are key to keeping your business safe from such risks and maintaining compliance with Ecuadorian law.

There are several global associations dedicated to its prevention which Ecuador aligns itself with. One of the largest and most important is the Association of Certified Anti-Money Laundering Specialists (ACAMS). ACAMS specializes in matters such as the international promotion of AML standards, training, and certifications for professionals operating in the financial areas of businesses. This serves as an internationally-recognized, standardized source of information for setting the right internal processes to follow in your company.

Regulatory Body in Ecuador

From the year 2005 in Ecuador, the Financial and Economic Analysis Unit (UAFE) was created, whose main function according to Article 11 of its current law is “the collection of information, reporting, execution of national prevention policies and strategies and eradication of the crime of money laundering and financing of crimes.” 

This institution establishes the criteria for identifying an “obligated subject.” According to the UAFE, an obligated subject is a commercial entity that must submit reports about its internal financial procedures for evaluation on its money laundering risk. 

As a commercial entity that falls within this category, you’ll need to undertake several steps to demonstrate your compliance with AML regulations. This involves seeking the support of a local Compliance Officer, developing an internal manual and undertaking due diligence to assess and monitor all internal monetary procedures.

Complying with local AML regulations 

The first point to consider is what are the procedures to follow, then we detail the most important:

1. Appoint a Compliance Officer, who must be a person with proven local experience and training in the area of anti-money laundering 
2. Prepare a compliance manual, detailing the points established by the law issued by the UAFE
3. Prepare a monthly report of all transactions your business makes valued at over US$10,000
4. Your Compliance Officer will be in charge of presenting an annual report of the work done in relation to procedures for the prevention of laundering to the representatives or shareholders of your company.

You can find more resources and detailed information on the Organic Law for the Prevention, Detection and Eradication of the Money Laundering Crime and the Financing of Crimes page, available to the public on the UAFE’s website.

Your accounting team needs to stay in the know

All AML processes and regulations revolve around the ability of individuals in your company to properly access and manage monetary resources. It is therefore very important to consider that the implementation of an asset laundering prevention process cannot occur without the direct participation of the company’s financial or accounting team.

For this reason, as an obligated subject, it is advisable to partner with trained personnel to perform the role of Compliance Officer, and to advise the team in charge of correct practices and processes to follow in accordance with AML law.

Positive moves for a regional economic power

Ecuador is complementing its strong economic growth with the development of internationally recognized commercial standards. This is great news for foreign business and future growth. With a pro-business government and strategically advantageous position in Latin America, Ecuador is well on its way to competing with the region’s top economic performers and attracting larger numbers of foreign investment.

Ecuadorian financial Compliance Officers are readily available, and take the burden of monitoring your company’s financial compliance off you. Partnering with a trusted local expert will make your expansion and integration into the local business environment much smoother.

Work with the experts

As each company is different and can operate with different models, you’ll need a Compliance Officer who can adopt best practices to your internal systems. This is where we can help.

At Biz Latin Hub, our Ecuador team has highly trained personnel in all areas related to local anti-money laundering legislation and commercial procedures. With extensive knowledge of Ecuador’s financial regulations, we can help you with all of your market entry and back-office needs, including implementing AML processes.

Find out how we can meet your needs and provide you with the best start to your new working environment. Reach out to us here for personalized services and guidance customized to your business.