If you are looking to expand your business globally and find new opportunities in markets across Latin America, then Ecuador is a country to consider. There has never been a better time to step foot in the nation and make a splash with your business. This is because of Ecuador’s strong and stable economy. According to the World Bank, Between 2006 and 2014, Ecuadorian GDP growth averaged 4.3 percent, driven mostly by high oil prices and substantial external financing. Moreover, it has low barriers to entry and a range of business opportunities.
As Ecuador becomes a more attractive destination for businesses, it is keen to maintain a healthy business environment. To retain this environment the government has set up a compliance system. Let’s see what exactly the role of the officers surrounding this system is, and what kind of reports they are expected to file.
Ecuador’s focus on preventing money-laundering
The international governmental landscape is seeing a trend towards preventing money laundering. Consequently, controlling entities have been given bigger importance by many governments. Ecuador is part of this trend. In this sense, the Ecuadorian government has created the UAFE institution.
The Ecuadorian government created Unidad de Análisis Financiero y Económico or UAFE (Financial and Economic Analysis Unit when translated) as a political entity to control the corporate compliance environment. As mentioned above, the main focus of the UAFE is to prevent money laundering within Ecuador.
Corporate Compliance Officers
When expanding to Ecuador, one cannot forget corporate compliance. Just like any other country, Ecuador demands a certain amount of corporate information on a monthly and yearly basis. This information is requested to prohibit any corruption or false business like money laundering. The person responsible for delivering this information is the company’s corporate compliance officer. This article will explain what exactly is the role of the officers surrounding this compliance, and how this corporate compliance is set up.
Compliance officers in Ecuador are people who work internally in companies or outsourced under a contract but directly with the company. They have to be qualified before the public entity that controls corporate compliance (UAFE). In general terms, they are people who are contracted directly by the company or offer services for several companies.
Compliance officers in Ecuador are expected to provide a standard of work that enforces the country’s desires to restrict all forms of money laundering. It is their responsibility to make sure companies are aligned with this view and comply with laws set by local authorities. However, as these officers are entrusted with this responsibility, they are expected to perform numerous yearly tasks. These tasks are designed to confirm the viability and justification of their status as compliance officers. Moreover, these tasks will ensure control over corporative activities during a year.
Government Tasks and Obligations
Some of the tasks executed by compliance officers in order to remain viable and trustworthy in Ecuador are:
- Submitting reports using the form and the structure issued by the Financial and Economic Analysis Unit – UAFE, according to the sector in which it belongs.
- Coordinating reporting activities with the UAFE in order to adequately fulfill the obligations of the obliged subject in matters of money laundering.
- Periodically review the consolidated United Nations lists of persons involved in terrorist activities. This is in order to detect if any of them is carrying out any operations within companies currently being reviewed.
- Periodically review the list of minimum charges for politically exposed persons (PEPs).
- Periodically review the OFAC List of persons linked to drug trafficking or terrorist activities. This is in order to detect if any of them is carrying out any operations with any company currently being reviewed.
- Report to the UAFE the first quarter of each year on the training received the previous year and the one planned for the next year. For all the personnel of the obliged subject, in relation to the legal and regulatory provisions, as well as internal manuals, policies, and procedures, on prevention and detection of money laundering and financing of terrorism.
Company Tasks and Obligations
Tasks of compliance officers reflect the activities and behavior of the company. These tasks are mostly concerning the legality of activities and desire of the authorities to control this. In other words, these tasks are why compliance officers are required in Ecuador.
As these officers perform numerous tasks in order for the company to remain eligible, we have summed up the most important ones:
- Monitor compliance with instructions for the prevention of money laundering and terrorist financing crimes of the subjects obliged to inform the unit and more requirements established by the UAFE.
- Performing the corresponding controls on transactions that equal or exceed the specific thresholds determined by the UAFE for each sector. These controls should constitute one of the inputs for the detection and reporting of unusual and unjustified operations.
- Cooperate with the UAFE in the timely delivery of the information that is requested, in accordance with the terms established in the Law. The refusal or delay in the delivery of the information will give rise to the beginning of the penal actions that correspond to the obstruction to justice or public service, without prejudice to the determination of liability in cases of money laundering and terrorism financing.
- Communicate on a permanent basis to all the personnel of the obliged subject, about the strict reservation with which the information requirements made by the UAFE must be maintained, in accordance with the provisions of the aforementioned Law.
Besides the role of corporate compliance officers, there are other compliance rules a company has to comply with. These rules are embedded within the various reports the officer has to file at the UAFE. Article 19 of the Regulation to the Organic Law on Prevention, Detection, and Eradication of the Crime of Money Laundering and Crime Financing determines the types of reports that should be sent to the UAFE, being the following:
- Reports of unusual and unjustified economic transactions, within the term established in article 4 letter d) of the Law. For this purpose, all the support of the case duly signed by the compliance officer shall be attached.
- Reports of operations and individual transactions whose amount is equal to or greater than ten thousand dollars of the United States of America or the equivalent in other currencies. As well as multiple operations and transactions that, taken together, are equal to or greater than the said value when they are made for the benefit of the same person and within a period of thirty (30) days (RESU). The term for compliance with this reporting obligation is set forth in article 4 letter c) of the Law.
- Reports of a company’s national and international operations that exceed the legal threshold, as established in article 4 letter e) of the Law.
- The operations and transactions indicated in this article that are carried out with jurisdictions considered as tax havens by Ecuador must be reported mandatorily as determined by the Law.
Complying with governmental standards for becoming a compliance officer may prove difficult due to language barriers or required qualifications. A useful alternative is acquiring a local partner. A local partner in Ecuador could become the compliance officer for your company and file the right reports to remain compliant.
Biz Latin Hub has been assisting companies to successfully conduct business in Latin America since 2014. Our local team of experts can assist you with your business needs in Ecuador. For personalized support, reach out to country manager Diego Mauricio Alvarez at [email protected]. We are ready when you are.