Through the issuance of Resolution No. 141/2016, the Financial Information Unit has eliminated the tax aspect as a part of customer's identification procedure.
The new regulation issued by the Financial Information Unit ("UIF") abandons the criteria adopted by former Resolution Nos. 121/2011 and 229/2011, according to which, to establish the Customer Profile ("Customer Profile") and to comply with due diligence, it was necessary to ask the client for detailed information and documentation related to their economic, patrimonial, financial and tax status.
Former Resolutions established, included but not limited to, the documentation that could be used by Reporting Entities to comply with the Customer Identification Procedure. Those documents included a statement of assets, income statement and tax returns.
The UIF changed its criteria and now considers that the tax aspect is not relevant to define the Transactional Profile (“Transactional Profile") or the Client's Risk Level (“Risk Level").
This authority considers that reducing due diligence requirements will promote financial inclusion and consequently, the operations carried out through the informal financial system may be reduced, according to recommendations issued by the Financial Action Task Force ("FATF").
The new rule includes a two-way approach to analyze the Customer’s Profile, based on the analysis of their Risk Level and Transactional Profile. Such analysis must be based on the "understanding of the purpose and the nature of the business relationship", as well as the economic and financial documentation – tax status was expressly excluded by this rule - provided by the customer or obtained by Reporting Entities.
Following the two-way approach, an Operation will be considered as Unusual by the new regulation ("Unusual Operation") when it lacks relation with the Risk Level and/or the Transactional Profile. However, the regulation maintains the uses and customs of the market - embodied in the previous text - as necessary elements for the determination of such operations.
Regarding the determination of Suspicious Operations ("Suspicious Operation"), the repealed text established that if the Reporting Entity detected an Unusual Operation, this entity should analyze if the operation was related to the Customer’s Profile, to qualify this Operation as Suspicious. Included in this classification were the cases in which the Reporting Entity hesitated about the authenticity of the documentation creating suspicions regarding the existence of money-laundering.
The Resolution reduces the requirements to determine a Suspicious Operation. An operation will be qualified as Suspicious, if money-laundering or terrorist financing activity is suspected.
Finally, the resolution extends the provisions in relation to Risk Analysis policies, which have to be complied with by the Reporting Entity to achieve a thorough knowledge and identification of the customer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
