That’s the warning Fusades makes in a legal analysis of the Superintendency of the Financial System (SSF) measure
“A bad evaluation can put the country on the usually” international blacklists “, which means that a country or territory is at high risk of crimes related to money laundering and terrorist financing, making it difficult or impossible type of financial transactions, for example the financing of international organizations, but also the international financial relations of private companies ”, warns Fusades in a legal analysis on the risks of the order that the Superintendency of the Financial System (SSF) gave banks for no accounts to cancel persons suspected of money laundering.
On December 9, 2020, the SSF issued a circular instructing commercial banks not to terminate contractual relationships with a customer (closing bank accounts), even if this person is under investigation or associated with the crime of money laundering through journalistic notes.
SEE: The government is ordering banks not to close accounts of those under investigation for alleged money laundering
“A business relationship must not be terminated by the mention of a customer, partner or employee in a mass media or the existence of a request for information by any competent authority or solely because of their status as a politically exposed person,” refers to the document .
It adds that “termination of a business relationship should not be based on the presumption of guilt.
In its legal analysis, the SSF indicates that “it has been informed that commercial banking relationships with customers, partners or employees have been terminated when they were associated with illegal activity through media publications or when they were classified as politically exposed persons”, by saying the banking entities argued that this would damage their commercial reputation and could therefore be subject to sanctions by the authorities.
In view of this, Fusades points out that “the instructions of the SSF on the one hand affect risk-based prevention, but on the other hand the information requirements they contain and are normally reported to the UIF (Financial Investigation Unit), they can affect their centralized nature, which is an international standard ”.
Fusades also believes that “they make some controls more flexible, such as restrictions, so that obliged entities can only request information under certain assumptions.”
In the first semester of 2022, El Salvador will be evaluated by the Caribbean Financial Action Task Force (CFATF), the regional body of the FATF (International Financial Action Group), which warns Fusades that the government-mandated measures to go through the Superintendency ” they could cause a bad rating, which would have negative consequences for the country, “as it is on the” blacklist “of risky countries for money laundering.
According to the analysis of the Legal Studies Department of Fusades, it can also have negative consequences in the fight against corruption and money laundering, as failure to comply with international standards can exclude the country from the Egmont group, which provides cooperation and international information- exchanges between the states’ financial investigation units, to combat money laundering and terrorist financing in a coordinated way, something that actually happened with the country’s suspension for a period in 2018.
Moreover, it ensures that the instructions can be called into question as to their legality and constitutionality, as their scope is contrary to Art. 1.195 of the Commercial Code, which provides that banks can close the deposit on a current account by means of a notification to the depositor.
“The implementation of the instructions by the SSF, without legal backing, would limit the fundamental right to free contracts related to current accounts,” Fusades wonders.
Likewise, it indicates that the instructions of the Superintendency may affect the principle of legality of the public administration, as they, without being empowered to do so, refer to paragraph 2 of the special provision of Article 9 of the Financial Investigation Instructions for the Prevention of Money Laundering and Financing of Terrorism, issued by the FGR, an institution with constitutional autonomy and powers to issue these instructions.
“Regardless of whether the aforementioned provision is legally correct or not, the truth is that the SSF does not have the power to enforce it without effect,” said Fusades.
When Gustavo Villatoro, head of the SSF, was consulted about the current measure, he justified at the time that the instruction is not intended to protect someone from corruption or money laundering, but rather to give the weapons to the courts so that they are captured. can take. over time the money that can be frozen to an examined person.
“If the prosecutors want to block the accounts, there is no more account and there is no money because the bank closed them,” said Villatoro, who also points out that the measure will allow for more banking.