December 15, 2016

Outsourcing and Money Laundering. New Interpretation by the Fiscal Authorities, by Miriam Name and Fernando Juárez

In recent days, the Unit of Financial Intelligence (UFI) of the Department of the Treasury and Public Credit issued new criteria identifying outsourcing as a vulnerable activity for purposes of the Federal Law for the Prevention and Identification of Transactions with Resources from Illicit Sources (LFPIORRC, for its Spanish acronym or Anti-Money Laundering Law).


By means of such criteria, the UFI determined that providing independent professional services (outsourcing) is a vulnerable activity pursuant to the terms of the Anti-Money Laundering Law.  Consequently, all Companies that provide personnel services, whether to related parties or to third parties, are subject to the regulations of the Anti-Money Laundering Law, and, therefore, must identify such transactions and provide required notices and reports contained in the LFPIORRC.


This situation increases the administrative and financial burden on many companies because it potentially exposes a company to the risk of being subject to fines for not complying with the legal provisions of the Anti-Money Laundering Law.


This criteria specifically affects those companies providing personnel services to their related sister companies, or other companies within the same corporate group.  This practice is considered as “insourcing.”.


Since the tax authorities do not specifically reference insourcing, our interpretation is that providing such intercompany services within the same corporate group is not subject to the Anti-Money Laundering Law, and, hence, there is no obligation to identify and report such activities. 


Nevertheless, it is recommended that companies conduct a full review of their specific situation in order to determine whether the criteria issued by the tax authorities applies to them.