Ecuador

Last Updated: 28/10/2014


CENTRAL AUTHORITY FOR REPORTING

Ecuador launched the Financial Intelligence Unit in 2005, which name later changed to Financial Analysis Unit (FAU) in 2010, with the introduction of the country’s first Anti-Money Laundering legislation, the Anti Money Laundering Act (AMLA). The FAU is the governmental authority that collects and reviews information obtained from certain reporting parties concerning unusual or unjustified financial operations or transactions. The purpose of the FAU is to process information regarding suspicious financial activity and, on a case-by-case basis, make recommendations to the Ministerio Público (Prosecutor’s Office) to carry out criminal investigations. 

The FAU is part of the Consejo Nacional Contra el Lavado de Activos, which is the public council that devises and approves plans to prevent asset and money laundering.


OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

Besides FAU and the Consejo Nacional Contra el Lavado de Activos, there are no other anti-money laundering regulators in Ecuador.


ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Provisions in the AMLA are very ample. Pursuant to article 3 of the AMLA, Insurance and financial services entities have the obligation to report to the FAU unusual transactions. Besides financial and insurance entities, the following entities or individuals also have the obligation to comply with reporting obligations before the FAU:

  • foreign affiliates under the control of Ecuadorian financial institutions
  • stock exchanges and broker houses;
  • fund managers and trustees;
  • cooperatives, foundations and NGOs;
  • individuals or corporations frequently involved in the sale of vehicles, boats, ships and aircrafts;
  • companies engaged in the service of national or international transfer of money or securities, domestic and international transportation of parcels, mail and parallel mail, including its operators, agents and agencies;
  • travel agencies and tour operators;
  • individuals or corporations frequently involved in investment and real estate brokerage and construction;
  • casinos and gambling, bingo, slot machines and racetracks;
  • pawnshops and pawnbrokers;
  • individuals and entities dealing with jewellery, precious metals and stones businesses;
  • dealers of antiques and works of art;
  • notaries and real estate and commercial registrars.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Anti-Money Laundering Act (AMLA) and resolutions issued by FAU.

AMLA was passed on 18 October 2005, and amended on 10 February 2012. This law is complemented by Decree 1071 of 21 March 2012 which contains Anti Money Laundering Regulations, and the Manual for the Prevention of Money Laundering Crimes and Terrorism Financing issued by the FAU and published on July 7, 2014.

Organic Integral Criminal Code.

Monetary and Financial Organic Code.


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

There is no current guidance for lawyers in place.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

No.


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

There are no regulations or guidelines for lawyers regarding the way they need to proceed for client identification and verification. However, certain larger law firms are increasingly taking some voluntary steps towards implementing know-your-client practices.


DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

No. There is no regulation or guidance with respect to DD by lawyers.


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

No. There is no regulation or guidance with respect to DD by lawyers.


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

No. There is no regulation or guidance with respect to DD by lawyers.


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

There is no regulation or guidance with respect to DD by lawyers. However, to the extent not prohibited, lawyers voluntarily conducting DD may rely on third party DD.


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

The Organic Integral Criminal Code establishes in Article 424 that a person is not under the obligation to report a crime where knowledge of such crime is under professional secrecy. Thus, a lawyer is arguably not obligated to report when his or her knowledge comes from a protected relationship.


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

When defending a client, a lawyer assumes no responsibility/liability for the criminal activity of his client. In addition, as noted before, the Organic Integral Criminal Code establishes in Article 424 that a person (including a lawyer) is not under the obligation to report a crime where knowledge of such crime is under professional secrecy. Nevertheless, if a lawyer participates in the commission of a crime with his client then he/she will be liable.


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

No.


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

There is no regulation or guidance with respect to DD by lawyers.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

There is no regulation or guidance with respect to DD by lawyers.


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

No. There is no regulation or guidance with respect to DD by lawyers.


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

No. There is no regulation or guidance with respect to DD by lawyers.


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

In addition to the explanations above, there are no other ways in which lawyers are affected by anti money laundering legislation.


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

Anti-money laundering regulation does not include specific exceptions related to lawyers, thus, lawyers may be prosecuted in the same manner as any other person for these types of crimes.


HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Ecuador is not member in FATF, but it is a member of GAFISUD, which is a regional body in South America similar to the FATF. The last mutual evaluation report  was released on 15 December 2011, which highlights the prohibition of lawyers disclosing secrets of their clients.

The latest FATF Public Statementregarding Ecuador on June 27, 2014, indicated that:

Ecuador has taken steps towards improving its AML/CFT regime, including by enacting a new criminal code, which includes provisions adequately criminalising money laundering and terrorist financing. However, despite Ecuador’s high-level political commitment to the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Ecuador has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. Ecuador should continue to work on implementing its action plan to address these deficiencies, including by (1) establishing and implementing adequate procedures to identify and freeze terrorist assets and (2) clarifying procedures for the confiscation of funds related to ML. Ecuador should also continue enhancing financial sector supervision. The FATF encourages Ecuador to address its remaining deficiencies and continue the process of implementing its action plan.



Information provided by:

Daniel Pino
Partner
Coronel & Pérez
Guayaquil, Ecuador 
dpino@coronelyperez.com
www.coronelyperez.com