Money Laundering and Asset Laundering Prevention: Compliance Requirements in El Salvador

Money laundering and asset laundering pose significant risks to businesses worldwide. To mitigate these risks, companies must strengthen their compliance systems and implement robust Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) measures. In El Salvador, all corporate entities, foreign branch offices, and non-profit organizations—regardless of their business activity—are legally required to register and adopt a Risk Prevention System under the supervision of the Financial Investigation Unit (UIF), which operates under the Attorney General’s Office (FGR).

To comply with current financial regulations, businesses must adhere to the NEW GUIDELINES FOR THE PREVENTION, DETECTION, AND CONTROL OF MONEY LAUNDERING, TERRORISM FINANCING, AND PROLIFERATION OF WEAPONS OF MASS DESTRUCTION FINANCING, which took effect on June 7, 2022.

One of the key requirements outlined in these regulations is the mandatory appointment of a Chief Compliance Officer (CCO) and an Alternate Compliance Officer for every registered company or entity operating in El Salvador.

Requirements for Compliance Officers in El Salvador

To ensure regulatory compliance, businesses must appoint qualified professionals who meet the following criteria:

1. Academic Background: Compliance Officers must hold a university degree.
2. Residency: Both the Chief Compliance Officer and Alternate Compliance Officer must reside in El Salvador.
3.  Expertise: Compliance Officers should have specialized knowledge in financial, operational, and legal aspects related to the company’s business activities.
4. AML Training: Officers must be properly trained in risk management and prevention strategies for money laundering (ML), terrorism financing (TF), and the proliferation of weapons of mass destruction financing (PWMD).

Key Considerations for Businesses

1. Independence and Autonomy: Compliance Officers must operate independently without interference in their duties.
2. Job Protection: They cannot be terminated, sanctioned, or removed for fulfilling their compliance responsibilities.
3. Internal Appointment Restrictions: If a company appoints an existing employee as a Compliance Officer, the individual cannot hold roles related to accounting, internal auditing, or similar functions to prevent conflicts of interest.
4. Direct Hiring: Compliance Officer positions cannot be outsourced; companies must directly employ individuals for these roles.

Adhering to money laundering and financial crime prevention laws is essential to avoid legal penalties, reputational damage, and operational risks. Given the evolving nature of global AML regulations, businesses must stay informed of the latest compliance updates to ensure seamless operations in El Salvador and abroad.

If you require specialized legal advice on AML compliance regulations or need assistance with the appointment of a Chief Compliance Officer, contact our team of AML specialists today to schedule a consultation.