Título III. Marco institucional

The National Council for Coordination of Efforts against Money Laundering or Other Assets, the Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction in Guatemala is hereby created, an authority chaired by the Vice President of the Republic, which shall be referred to for purposes of this Law as CONCLAFT, whose purpose shall be to coordinate efforts and cooperation among the State institutions participating within the legal structure for the prevention and suppression of money laundering or other assets and the financing of terrorism, for the purpose of contributing to effective compliance with this Law, its regulation, agreements and international treaties approved and ratified by the State of Guatemala on the subject matter of this Law, within a national system for the prevention and suppression of such acts, respecting the legal jurisdiction and functions of each institution.

The powers of CONCLAFT for the prevention and repression of money laundering or other assets, of the financing of terrorism and of the proliferation of weapons of mass destruction, are the following:

a)To identify, assess and understand the risks of money laundering or other assets, of financing of terrorism and of proliferation of weapons of mass destruction at the national level in order to coordinate the actions that allow their mitigation.

b)To periodically review the assessment of the risks of money laundering or other assets and of financing of terrorism at the national level and to approve the strategies, policies, mechanisms and activities that comprehensively contribute to effectively preventing them.

c)To analyze the different situations or specific threats that require developing, implementing and applying concrete measures to mitigate their impact at the national level.

d)To coordinate at the national level the execution of the strategies, policies, mechanisms and activities for their prevention and repression, and where applicable, to coordinate mechanisms to combat the financing of the proliferation of weapons of mass destruction; as well as compliance with and implementation of the agreements or international treaties approved and ratified by the State of Guatemala and international standards on the matter.

e)To promote that the entities represented in CONCLAFT keep statistical records of the facts arising in this matter within their legal functions and powers.

f)To analyze the existing regulations of the country on the matter of its prevention and repression, for the purpose of making recommendations aimed at strengthening the same.

g)To establish the adequate communication and coordination mechanisms among the entities represented in CONCLAFT, for the achievement of its purpose.

h)To issue the corresponding internal provisions it considers necessary to regulate its operation and application of powers.

i)To approve or disapprove the incorporation of new Obligated Persons, based on the proposal made by the Superintendent of Banks.

j)Others as defined in this Law or any other applicable legal provision.

CONCLAFT is composed of the following public officials:

a)Vice President of the Republic, who presides over it and coordinates it;

b)Minister of Foreign Affairs;

c)Minister of the Interior;

d)Minister of National Defense;

e)Minister of Economy;

f)Secretary of Strategic State Intelligence;

g)Secretary General of the National Secretariat for the Administration of Property in Civil Forfeiture;

h)Director General of Civil Intelligence; and,

i)Superintendent of Banks.

The members who make up CONCLAFT shall hold their offices ad honorem.

In order to guarantee effective coordination of national efforts in the prevention and suppression of money laundering or other assets and of financing of terrorism, CONCLAFT shall have as permanent guests at its sessions the following public officials:

1.President of the Congress of the Republic of Guatemala and of the Legislative Branch;

2.President of the Supreme Court of Justice and of the Judicial Branch;

3.Prosecutor General of the Republic and Head of the Public Prosecutor's Office;

4.President of the Monetary Board and of the Bank of Guatemala; and,

5.Comptroller General of Accounts.

Additionally, CONCLAFT may convene as guests those persons it considers necessary for the achievement of its purpose. All guests shall have voice but no vote in the sessions of CONCLAFT.

CONCLAFT shall hold ordinary sessions at least twice a year and extraordinary sessions when convened by its coordinator. In the event of justified impediment on the part of its members to attend the sessions held, they shall delegate in writing their representation to a high-level public official of the Ministry, Secretariat, entity or dependency under their charge, and in the case of invitees, they may delegate their participation as follows: i) that of the President of the Congress of the Republic of Guatemala and of the Legislative Branch, to a Vice President of the Board of Directors of the Congress of the Republic of Guatemala; ii) that of the President of the Supreme Court of Justice and of the Judicial Branch, to a magistrate of the Supreme Court of Justice; iii) that of the Prosecutor General of the Republic and Head of the Public Prosecutor's Office, to the Secretary for Criminal Policy of the Public Prosecutor's Office; iv) that of the President of the Monetary Board and of the Bank of Guatemala, to the Vice President of the Monetary Board; and, v) that of the Comptroller General of Accounts, to a Deputy Comptroller.

Efforts shall be made to ensure that the decisions adopted by CONCLAFT are by consensus of its members and, if such consensus is not reached, decisions shall be taken by simple majority of all members.

The Technical Secretariat of CONCLAFT shall be under the responsibility of the Superintendency of Banks, through the Special Verification Intendency (IVE), acting through the Special Verification Intendant. The CONCLAFT coordinator shall have the technical and logistical support of this Technical Secretariat, which, in turn, may request collaboration from other members of CONCLAFT.

The Special Verification Intendency forms part of the organic structure of the Superintendency of Banks, the Superintendent of Banks being the superior administrative authority and the Special Verification Intendant being the person who shall be in charge of said Intendency. The IVE shall have sufficient technology and resources, as well as suitable personnel, in accordance with the profiles defined for each position and whose hiring shall be carried out following the policies and procedures established by the Superintendency of Banks.

The Special Verification Intendancy is principally in charge of the receipt and analysis of information and, where appropriate, the dissemination of financial intelligence information to the competent authorities, to prevent and suppress money laundering or other assets and the financing of terrorism.

The Superintendency of Banks, through the IVE, shall exercise its functions and powers in the strictly administrative and technical sphere in accordance with the provisions of this Law, its regulations and other applicable provisions; as well as in the agreements or international treaties approved and ratified by the State of Guatemala.

The following are the functions and powers of the Superintendency of Banks, through the IVE:

a)To require and receive from Obligated Persons all information, documentation, files and records necessary for the performance of its functions.

b)To conduct analysis of the information obtained, in accordance with established internal processes, for the purpose of generating financial intelligence information.

c)To refer financial intelligence information to the Public Prosecutor's Office, through the Prosecutor's Office Against Money Laundering or Other Assets, when transactions, operations or any other matter are identified that may be related to the crimes of money laundering or other assets or financing of terrorism.

d)To provide cooperation to the Public Prosecutor's Office through the Prosecutor's Office Against Money Laundering or Other Assets, strictly within the legal framework of the functions and powers of the Special Verification Intendency.

e)To issue administrative provisions that Obligated Persons must observe for the prevention of money laundering or other assets and the financing of terrorism and to communicate them in the manner it deems appropriate.

f)To administer and maintain, with due safekeeping and adequate technological means, the information, files, records, computer systems and statistics necessary for the effective performance of its functions and powers, including the adoption of security measures and levels of access to information and facilities.

g)To communicate to Obligated Persons typologies, trends, patterns, alerts or other information relevant to the prevention of money laundering or other assets and the financing of terrorism; as well as information relating to the financing of the proliferation of weapons of mass destruction, as determined in accordance with its analyses or as received from international organizations.

h)To establish guidelines and implement feedback mechanisms to Obligated Persons regarding the quality of the reports they have provided to the IVE.

i)To promptly communicate to Obligated Persons the designation or removal of persons or entities listed or designated by the United Nations Security Council and its subsidiary bodies, linked to terrorism, financing of terrorism or financing of the proliferation of weapons of mass destruction, as well as to require from them information on the actions taken pursuant to such communications.

j)To participate in or form part of groups of financial intelligence units, as well as to sign and adhere to their principles of information exchange.

k)To impose on Obligated Persons the administrative sanctions as established in this Law, its regulations and other applicable provisions.

l)To design, promote and implement permanent training, technical assistance and outreach programs, aimed at Obligated Persons, with emphasis on micro, small and medium-sized enterprises, as well as the general public, on the prevention, detection and reporting of transactions related to money laundering or other assets and the financing of terrorism. For the performance of this function, inter alia, the IVE may prepare and disseminate accessible guides, manuals and educational material; develop in-person and virtual training programs; provide technical guidance to Obligated Persons for the proper fulfillment of legal obligations; and coordinate with public and private entities and international organizations awareness-raising and capacity-building actions.

m)Others arising from this Law, its regulations and international agreements approved and ratified by the State of Guatemala in the subject matter of this Law.

By virtue of its financial intelligence nature, the information referred to in subparagraphs c) and d) of this article constitutes preliminary, analytical and non-jurisdictional information, and therefore shall lack evidentiary value in judicial proceedings of any nature.

Such information may not be used by the Public Prosecutor's Office as the sole basis for the exercise of criminal prosecution, the request for interim protective measures or the formulation of charges, and must be previously corroborated through independent investigative acts carried out in accordance with the law. The Superintendency of Banks, through the Special Verification Intendency, shall be responsible for ensuring that the financial intelligence information it generates and disseminates meets criteria of objectivity, traceability, integrity and due analytical foundation, as well as for safeguarding its confidentiality and appropriate use.

Improper, disproportionate or extra-legal use of such information by any authority shall give rise to the corresponding administrative, civil and criminal liability, in accordance with applicable legislation. In no case may such information by itself justify the restriction of fundamental rights.

The information and documentation obtained and produced by the Superintendency of Banks through the Special Verification Intendency, in the exercise of its functions and powers, in accordance with this Law, its regulations and other applicable provisions, is confidential in nature. Consequently, the persons who comprise the IVE are obligated to maintain it as confidential, even after having ceased in their position or functions; any other person who by reason of his or her position or functions knows or has access thereto shall have the same obligation, without prejudice to the legal liabilities arising from noncompliance therewith.

The Superintendency of Banks through the IVE may publish, in the manner it deems appropriate, information of a statistical nature, provided it is done in such a manner that the related persons or entities cannot be identified, directly or indirectly, on an individual basis.

Due to the nature of the functions and powers related to financial intelligence and supervision in matters of prevention of money laundering or other assets and financing of terrorism, performed by the authorities, public officials and employees of the Superintendency of Banks, they shall be barred from:

a)Testifying as witnesses in proceedings of any nature that relate to or derive from the functions and powers incumbent upon them pursuant to this Law, its regulations and other applicable provisions.

b)Being appointed as experts, specialists or technical consultants in proceedings of any nature that relate to or derive from the functions and powers incumbent upon them pursuant to this Law, its regulations and other applicable provisions.

The provisions of this article shall apply to the aforementioned authorities, public officials and employees, even after they have left office.

The IVE shall be headed by an intendant, who shall be appointed by the Monetary Board upon proposal by the Superintendent of Banks, meeting the qualifications established by this Law.

The Intendant of Special Verification shall meet the following qualifications:

a)Be a Guatemalan encompassed in Article 144 of the Political Constitution of the Republic of Guatemala.

b)Be over thirty (30) years of age.

c)Be of recognized honorability and professional capacity.

d)Be in the enjoyment of their civil rights.

e)Hold a professional degree as attorney and notary, certified public accountant and auditor, or economist. In all cases, five (5) years of experience in the prevention of money laundering or other assets and knowledge of banking operations shall be accredited.

f)Have practiced their profession for at least five (5) years.

Those who may not be appointed to the office of Special Verification Intendant:

a)Leaders of organizations of a political, guild, business or union character;

b)Ministers of any creed or religion;

c)Relatives within the fourth degree of consanguinity or second degree of affinity of the President or Vice President of the Republic; of the presidents of the State Organs; of the State ministers or vice-ministers; of the members of the Monetary Board and of the authorities of the Bank of Guatemala and of the Superintendency of Banks;

d)Partners whose participation is equal to or greater than five percent (≥5%) of the paid-in capital, directors or administrators of the Obligated Persons referred to in this Law, and their relatives within the fourth degree of consanguinity or second degree of affinity;

e)Persons who are known delinquent debtors;

f)Persons who have not resolved their insolvency situation in accordance with the provisions of the specific law; as well as persons who are subject to trial for proceedings in this matter before the competent tribunals;

g)Persons who have been convicted of any intentional crime, as long as they have not served the corresponding penalties and in no case while five years have not elapsed since the occurrence of the act; as well as persons who are subject to criminal proceedings for intentional crimes before the competent tribunals; and,

h)Persons who are legally incapable of performing the office.

In the event of temporary absence of the Intendant of Special Verification, he shall be substituted for the duration of such absence by the director of said Intendency designated by the Superintendent of Banks, in accordance with the annual schedule prepared for that purpose.

Due to the nature of the functions and powers related to financial intelligence and supervision in matters of prevention of money laundering or other assets and financing of terrorism, performed by the authorities, public officials and employees of the Superintendency of Banks, the personal information and documentation thereof is considered confidential in nature and, therefore, its revelation or disclosure is prohibited, without prejudice to the legal liabilities arising from noncompliance therewith.

Due to the nature of the functions and powers related to financial intelligence, the Superintendency of Banks shall adopt the necessary measures to provide security to the facilities and information of the IVE.

The Superintendency of Banks, through the Special Verification Intendency, acting through its Intendant, is empowered to sign memoranda of understanding or other cooperation agreements with foreign counterpart authorities. For that purpose, among other matters, the IVE may:

a)Request or exchange with foreign counterpart entities the information, documentation, data or financial intelligence analysis, for the strict performance of its functions and powers.

b)Collect and forward information, documentation or data at the request of foreign counterpart entities.

c)Spontaneously forward information, documentation, data or financial intelligence analysis in its possession to foreign counterpart entities.

d)Provide feedback to foreign counterpart entities that have provided information to the IVE, concerning the use of such information or the results of the analysis performed thereon, when they so request.

Additionally, the Superintendency of Banks through the IVE may carry out any of the cases set forth in the preceding items with foreign counterpart entities with which it has not signed memoranda of understanding or other cooperation agreements, provided that such Financial Intelligence Units are members of the Egmont Group of Financial Intelligence Units.

For compliance with the provisions of this article, the Superintendency of Banks, through the IVE, shall have defined and secure mechanisms and channels that allow the transmission and execution of requests for information, documentation, data or financial intelligence analysis; as well as procedures for safeguarding the information to be exchanged, which shall have the same confidential character referred to in Article 53 of this Law.

All public entities, dependencies and institutions and private entities or companies are obligated to provide the cooperation requested by the Superintendency of Banks through the Special Verification Intendency for the fulfillment of its functions and powers. Said entities shall confidentially comply with the requirements made to them by the IVE in the form and time limit requested by it, without prejudice to the legal liabilities arising from noncompliance therewith.

The Superintendency of Banks shall exercise supervision functions in ML/TF matters, in accordance with this Law, its regulations and other applicable provisions.

Supervision shall be carried out based on the methodology defined by the corresponding supervisory authority, under a risk-based supervision approach, for which best practices and international standards in the matter shall be observed.

Supervision of the Obligated Persons does not imply, in any case, that the Superintendency of Banks, its authorities, public officials or personnel exercising it, assume any liability for the actions of the Obligated Persons, which shall be liable for their management and compliance with the obligations that this Law, its regulations and other applicable provisions impose on them, as well as for the legal effects and consequences arising from their non-compliance.

The following are functions inherent to the supervision of Obligated Persons in LD/FT matters:

a)Evaluate the suitability and implementation of the policies, procedures, controls and systems for the effective management and mitigation of the LD/FT/FPADM Risk of the Obligated Persons and, where appropriate, require the corresponding corrective actions.

b)Supervise, on a risk basis, compliance with the obligations established in this Law, its regulation and other applicable provisions.

c)Issue in reasoned form the instructions aimed at remedying the deficiencies or irregularities that may be found.

d)Impose on the Obligated Persons the administrative sanctions in accordance with the provisions of this Law, its regulation and other applicable provisions.

Noncompliance by Obligated Persons with any of the provisions of this Law, its regulations and other applicable provisions in this matter, administrative orders issued by the Superintendency of Banks through the IVE, shall be administratively sanctioned, with observance of the principles of due process and the right of defense established in the Political Constitution of the Republic of Guatemala, without prejudice to any criminal and civil liability incurred.

Based on their seriousness, acts of noncompliance shall be classified as serious, moderate or minor, in accordance with the provisions of the regulations under this Law.

Obligated Persons who incur any noncompliance, in accordance with Article 65 of this Law, shall be sanctioned based on the seriousness thereof and the offender's record, with a written warning or fine to be applied in a range from five hundred dollars (US$ 500.00) to three hundred thousand dollars (US$ 300,000.00) of the United States of America or its equivalent in national currency.

The amount of the fine shall be graduated as follows:

a)The circumstances of the case;

b)The conduct of the offender; and,

c)The type of Obligated Person.

The regulations of this Law shall establish provisions regarding classification by type of noncompliance, proportional graduation of the fine and by type of Obligated Person.

When the Obligated Person has carried out actions to prevent or hinder the Special Verification Intendency from gaining knowledge of acts or omissions giving rise to noncompliance, the fine established in this Law and its regulation shall be double such fine or the equivalent of twenty percent (20%) of the amount of the transaction or transactions related to the noncompliance, whichever is greater.

The regulation of this Law shall define the administrative procedure that shall be applied for the imposition of sanctions, in which the principles of due process and the right of defense, established in the Political Constitution of the Republic of Guatemala, shall be observed.

Without prejudice to the imposition of the administrative sanction, the Obligated Person shall comply with the omitted obligation that gave rise to the sanction, in the manner and within the time limit as indicated to it, except in those cases in which, in accordance with the information or evidentiary means available, it is evident that it would be impossible to fulfill the obligation or that it had been fulfilled before the imposition of the sanction, in which case only the application of the corresponding sanction shall proceed.

Obligated Persons subject to the supervision and inspection of the Superintendency of Banks may file against the respective decisions an appeal before the Monetary Board, which shall be processed in accordance with the provisions of the Financial Supervision Law, Decree Number 18-2002 of the Congress of the Republic.

Obligated Persons not subject to the supervision and inspection of the Superintendency of Banks may file against the decisions issued an application for revocation before the Monetary Board, which shall be processed in accordance with the provisions of the Contentious Administrative Law, Decree Number 119-96 of the Congress of the Republic.

The amount of the fines imposed for the administrative sanctions arising from non-compliance with this Law, its regulations and other applicable provisions, shall be collected by the Superintendency of Banks, which shall allocate fifty percent (50%) thereof for training of IVE personnel in LD/FT prevention and compliance matters and the other fifty percent (50%) shall increase its budget.

The corresponding supervisory authority may require Obligated Persons who repeatedly commit noncompliances defined in the regulations under this Law to submit an action plan to correct the deficiencies that caused the noncompliances. The plan shall be subject to approval by the corresponding supervisory authority and shall include aspects related to strengthening controls and the system for the prevention of LD/FT/FPADM Risk; likewise, in the case of repeated noncompliance defined as serious in the regulations, it may require the superior administrative body to apply sanctions to personnel, officers, executives or directors who were responsible for the noncompliance. The aforementioned plan, once approved, shall be implemented by the Obligated Person within the time limit granted by the supervisory authority, which shall not exceed six (6) months and may be extended only once, for a time limit not exceeding that initially granted.

In the case of the Obligated Persons indicated in subparagraph a) of Article 3 of this Law where the Superintendency of Banks determines that they failed to comply with implementation of the required action plan, it may apply the provisions of Article 73, subparagraph a) of the Law on Banks and Financial Groups, Decree Number 19-2002 of the Congress of the Republic; Article 70, subparagraph a) of the Insurance Activity Law, Decree Number 25-2010 of the Congress of the Republic; or Article 49, subparagraph a) of the Law on Microfinance Entities and Nonprofit Microfinance Entities, Decree Number 25-2016 of the Congress of the Republic, as applicable.

The aspects indicated in the first paragraph shall be further developed in the regulations under this Law.