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Ecuador: New Anti-Money Laundering Law

(Sept. 16, 2016) Ecuador’s new Law on the Prevention and Eradication of Money Laundering was adopted by the legislature on July 21, 2016. (Ley Orgánica de Prevención, Detección y Erradicación del Delito de Lavado de Activos y del Financiamiento de Delitos, REGISTRO OFICIAL (RO) (the official gazette) (July 21, 2016).)  The Law extends to nonfinancial businesses and organizations the obligation to report within four days suspicious financial transactions involving amounts of more than US$10,000. (Id. art. 4.)

Under the new law, mail service providers and providers of transportation for cash, valuables, and parcels; trust and fund administrators; cooperatives, foundations and nongovernment organizations; and individuals and businesses who conduct transactions in motor vehicles, ships, boats, and airplanes will also be required to comply with the reporting obligation for transactions of more than US$10,000. (Id. art. 5.)

The sponsor of the legislation stated that its purpose is to detect money laundering in a more proactive manner. The new Law therefore targets tracing property transfers; the possession, use, and marketing of, and internal or external trade in, property; and gratuitous or for profit transactions of assets in general. (Asamblea del Ecuador Aprueba Ley para Reprimir Lavado de Activos, EL UNIVERSO (June 9, 2016).)

Among the most important reforms is an added provision to the Integral Penal Code [Código Orgánico Penal Integral] that penalizes tax fraud committed through third parties. (Id.; Law on the Prevention and Eradication of Money Laundering, Disposición Reformatoria [Amending Provision] §§1 & 2; Código Orgánico Integral Penal [Integral Penal Code], RO (Feb. 10, 2014).)

Under the new Law, the Financial Analysis Unit, which is currently under the Attorney General’s office structure, will now become an autonomous body within the Coordinating Ministry of Economic Policy and change its name to the Unit of Financial and Economic Analysis. (Law on the Prevention and Eradication of Money Laundering, Disposición Transitoria [Transitional Provision], § 3.)