This content is from: Local Insights

Dominican Republic: AML and counter-terrorism legislation

Throughout history, money laundering has been used in various criminal areas, such as drug trafficking, terrorism, and investment and banking fraud. The subjects practising such activities usually seek out nations that have weak regulation and supervision of these matters.

The Dominican Republic has ratified certain international agreements and conventions that have helped nations cooperate with each other to prevent subjects from practising these illegal activities on their soil. These include the Inter-American Convention against Corruption, in 1996; and the United Nations Convention against Transnational Organised Crime, in 2002. Following this, the Dominican Republic's Congress enacted the first regulation on this matter, Law 72-02, on June 7 2002, regulating the topics treated in the previously mentioned conventions.

In 2012, a series of recommendations rendered Law 72-02 obsolete. These new recommendations were designed to prevent and combat money laundering, terrorism financing, financing for the proliferation of mass destruction weaponry, and other issues that were a serious threat to the international financial system.

Following on from these recommendations, the Dominican National Congress started working on a new law that served as a 'transparent and useful tool to pursue crime'. This legislation was finally enacted on June 1 2017. The law established: (i) the acts that were classified as asset laundering, the previous or determinant offences constituting terrorism financing, as well as the applicable penal sanctions; (ii) special investigation techniques, mechanisms for international cooperation and judicial assistance, and precautionary measures applicable to asset laundering and terrorism financing; (iii) a system for the prevention and detection of asset laundering operations, terrorism financing and financing of the proliferation of weapons of mass destruction, determining the responsible subjects and their obligations, and prohibitions and the administrative sanctions applicable in cases of non-observance of the provisions of the Law; and, (iv) an institutional framework for the purpose of preventing the use of the national economic system for asset laundering, terrorism financing and financing of the proliferation of mass destruction weaponry.

The new law prevented the Dominican Republic from appearing on what is known in the financial world as the 'black list' of the Financial Action Task Force (FAFT), which could have affected foreign investment into the country, damaging the country's overall economy. It also provided the Dominican government with a tool to sanction anyone intending to pursue this kind of criminal activity, protecting foreign and local investment and guaranteeing safety for the Dominican population in general.

The Dominican Republic, as a major target for foreign investment in the Caribbean, could not afford to have weak regulation on supervision in this regard. The nation has a duty to existing and future investors to strengthen its anti-money laundering measures in accordance with international standards, and to actively empower the country itself in this regard. The application of this new law and its regulations has very clearly demonstrated the new reality of the country's governmental institutions and business framework.

Di Carlo

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