spain compliance aml kyc

Nestled between the Atlantic Ocean and the Mediterranean Sea, Spain’s once booming economy has fallen on hard times in recent years. After the global recession in 2008, the Spanish economy shrank while unemployment levels grew, but the situation has been gradually recovering largely thanks to the country’s strong exports of goods and services.

Another challenge faced by the Western European nation has been the high level of money laundering and terrorist funding activity. Despite rigorous efforts by local law enforcement, Spain continues to be favored as an entry point for shipments from North African and South American drug traffickers into the rest of Europe due to its geographically central location. However, Spain has continually made great strides when it comes to combating money laundering and terrorist funding.

In May 2014, a new Spanish Royal Decree brought in updated anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. At the same time as the new regulations came into force, the Financial Action Task Force (FATF), an international organization that defines AML and CTF standards for its member countries, also conducted an on-site visit of Spain to evaluate the country’s level of compliance.

The FATF’s report, issued late last year, provided a generally glowing review and positive outlook on the Spanish AML/CFT system. It found the country’s laws and regulations to be up-to-date and Sepblac, the national financial intelligence unit and supervisory body to be highly effective. Spain was also lauded for possessing a solid understanding of its money laundering and terrorist funding risks and for its significant successes in investigating and prosecuting regulatory breaches.

At the same time, the FATF also pointed out a number of areas for improvement. Among them, the organization recommended that Spain strengthen its supervision for lawyers and real estate agents, as criminal organizations make frequent use of these professions to launder money through legal arrangements and the purchase and sale of property. Other recommendations included increasing prison sentences for money laundering convictions and implementing sanctions to allow freezing assets connected with terrorist groups.

While certainly not perfect, Spain’s AML/CFT regime has passed the muster of its international peers and serves as a good example for other countries. Sepblac is recognized for its sophisticated approach to analyzing risk, which strengthens its ability to act in its supervisory role in the financial sector as well as advise the AML regulator, the Secretaría del Tesoro. Coordination between Sepblac and the central bank, the Bank of Spain, is especially strong. However, the FATF pointed out that Sepblac will require considerably more resources in order to provide adequate oversight for high-risk areas.

What other countries do you think provide a good compliance model?