On 6 May 2014, the Spanish Official State Gazette published Royal Decree 304/2014 passing the Regulation of Act 10/2010 on Anti-Money Laundering and Counter-Terrorist Financing, which completes the implementation into Spanish law of Directive 2005/60/EC. The Royal Decree, which repeals former Royal Decree 925/1995, entered into force on 6 May, with the exception of the identification threshold in occasional transactions, which will enter into force on 6 November 2014. The Royal Decree does not provide for a general transitional period. Therefore, persons and entities covered by Spanish regulations on AML & CTF (“Covered Persons”), including those that act in Spain on a cross-border basis (i.e. without permanent presence in Spain) or under a Spanish Branch are required to analyse the impact of the new regulations and adapt their AML Manuals and internal control procedures without delay. See Appendix for the list of Covered Persons. The new Royal Decree is a lengthy document that introduces numerous precisions and nuances relating to the requirements that Covered Persons must meet, as well as specific requirements for certain entities (foundations, insurance companies, insurance brokers, retailers, etc.). Amongst the many new developments introduced by the Royal Decree, the following should be highlighted:

  • It excludes entities involved in currency exchange services that are ancillary to the main business from its scope of application, provided they comply with certain requirements.
  • It waives the obligation to comply with certain internal control mechanisms (e.g. to have an AML Manual, to create an internal control body, document retention requirements, etc.) for entities that employ a limited number of people and whose annual turnover or general balance sheet does not exceed certain thresholds, provided they do not belong to a corporate group which does exceed them.
  • It introduces the obligation for Covered Persons with an annual turnover exceeding €50 million or whose general balance sheet exceeds €43 million to have a technical unit with full-time specialised personnel to process and analyse the information.
  • It excludes the obligation of formally identifying the parties intervening in occasional transactions of an amount less than €1,000, although this exception does not apply to money remittance services.
  • It admits Commercial Registry certificates provided by clients or obtained by electronic means for the formal identification of the client. In addition, in the case of legal persons, the validity of the information contained in documents they provide to Covered Persons must be certified by a “responsible statement by the customer”.
  • It requires identification of beneficial ownership prior to making transfers above €1,000 or occasional transactions exceeding €15,000.
  • In the event no person controls more than 25% of the share capital or voting rights or controls the legal person client by other means, the beneficial owner will be considered to be the director or directors, the Covered Person having until 6 May 2016 to identify them. In order to identify the beneficial owner, Covered Persons are entitled to access the General Council of Public Notaries’ database (after signing the relevant agreement).
  • It establishes that for above average risk clients, the on-going monitoring of the business relationship must be carried out at least on an annual basis.
  • It extends the list of clients, products and transactions subject to simplified due diligence measures.
  • It specifies the enhanced due diligence measures that must be applied in the event of an above average risk. In addition, it establishes the types of countries, territories and jurisdictions considered to be of risk (including, but not limited to those that present a “significant extraterritorial financial sector”).
  • It extends the cases of systematic monthly reporting to SEPBLAC, amongst others, to transfers by credit institutions to or from foreign countries, irrespective of their amount and with the obligation to provide a breakdown of the transfer’s country of origin and destination. This reporting requirement will not apply until further specified by SEPBLAC, together with the form and content of the reporting.
  • It expressly establishes the list of Covered Persons that are not subject to the systematic monthly reporting to SEPBLAC.

By María Gracia Rubio and José María Olivares (Baker & McKenzie Madrid)