Venezuela

1. Does Venezuela have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes, there are four key pieces of legislation that regulate money laundering and terrorist financing. The Venezuelan Constitution and the Venezuelan Criminal Code both consider money laundering and terrorist financing as criminal activity.

The Organic Law against Organized Crime and Terrorist Financing (Ley Orgánica contra la Delincuencia Organizada y el Financiamiento al Terrorismo), (2012) is the most relevant on this matter.

Additionally, Venezuela has Resolution No. 083.18 of the Superintendence for Institutions of the Banking Sector (hereinafter “SUDEBAN Resolution”) establishes the rules related to the administration and inspection on money laundering, terrorism financing and financing for the proliferation of weapons of mass destruction, published on January 17th, 2019.

The Decree-Law for the Banking Sector Institutions published in December 8th, 2014, also regulates money laundering and/or terrorist financing in several of its provisions.

The Law Against Illicit Exchanges, published on May 17th, 2010, which was later amended by a December 4th of 2013 version, February 19th of 2014 version, November 18th of 2014 version, December 30th of 2015; that regulated to some extent matters related to the legal acquisition of foreign currency, was repealed by the “Constituent Decree establishing the Repeal of the Exchange Regime and its Illicit” published on August 2nd of 2018.

2. To whom does the legislation apply?

The Organic Law against Organized Crime and Terrorist Financing sets out in article 9 those obligated individuals and entities whose activity is governed by the laws regulating sectors. Furthermore, the category of obligated individuals may be extended through law or decree-law to other actors whose obligations, charges and duties are pertinent to their economic activity.

The SUDEBAN Resolution is aimed at institutions in the Banking sector that are mentioned in article 3 of the Decree-Law for Institutions of the Banking Sector. These are brought under inspection, supervision, vigilance, regulation, control and sanctions of this Superintendence, as well as those that are going through mergers and acquisitions in accordance of the cited Decree-Law.

3. What does the legislation prohibit?

The Organic Law against Organized Crime and Terrorist Financing, also prohibits the crimes established in the Venezuelan Criminal Code regarding terrorism financing and money laundering, prohibits obligated individuals from reporting to the client, user or third parties when an investigation is taking place or that information is being reported to any competent authority; close the account or deprive of assistance to individuals or entities when an investigation is taking place for money laundering or terrorism financing; send currency in cash or bearer securities through public post or parcel offices and the knowing possession of funds, capital, assets, assets or benefits that come from illicit activity; as well as hide or conceal funds that comes from an illicit source]. Also, the Decree-Law establishes limitations on who could be a shareholder or director of institutions belonging to the banking sector.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money Laundering is defined in article 35 of The Organic Law against Organized Crime and Terrorist Financing as “anyone that, by their own means or through an intermediary, owns or possesses capital, goods, funds, assets or benefits, knowing that they come directly or indirectly from an illegal activity, shall be penalized with imprisonment of 10 up to 15 years and a penalty fee for the amount of the illicit enrichment”. The same penalty in this article shall be applied to anyone that, by their own means or through an intermediary, (i) converts, transfers or moves through any mean goods, capital, assets, profits or surpluses in order to hide or conceal their illicit origin or anyone that help any person who participates in the commission of such crimes to avoid the legal consequences of their actions, (ii) hides, covers or simulates the nature, origin, location, disposition, destiny, movement or property of goods or of the legitimate right to said goods, (iii) acquires, possesses or utilizes goods that are product of a felony, and (iv) safeguards, invests, transforms, custody or administrates goods or capitals that come from illicit activities”. For the classification of this action as criminal, it is necessary that the assets come from an illicit activity; hence, the claimant must prove that those goods are the result of an illegal activity.

5. What level of intent or knowledge is required to establish a violation?

Even though the commission of this crime is usually performed knowingly, according to article 36 of the Organic Law against Organized Crime and Terrorist Financing, money laundering can also be performed due to negligence, imprudence or inexperience.

6. What are the potential penalties for infringing the legislation?

The Organic Law sets forth in article 35 as penalty term of imprisonment of ten to 15 years and a penalty fee equivalent to the illicit enrichment for anyone that commits money laundering, whether committed intentionally or due to negligence, imprudence or inexperience. In respect of financing terrorism, this felony has a term of imprisonment of 15 to 25 years (article 53), regardless of whether the funds are used by an individual terrorist or by a terrorist organisation operating in foreign territory or regardless of the country where the terrorist act or acts take place.

7. Does the legislation have extra-territorial reach?

There are several provisions in the Organic Law that have extra-territorial reach, such as: (i) Venezuelans and foreigners who commit any of the crimes established in the Organic Law in a foreign country, which violate the patrimonial interests, integrity or security of the Bolivarian Republic of Venezuela, are subject to trial in Venezuela; (ii) Any Venezuelan citizen investigated for the offense of any of the crimes defined in the Organic Law, or if part of the crime has been committed in the territory of the Bolivarian Republic of Venezuela, on the high seas or at extraterritorial sea or in international airspace, are subject to trial in Venezuela. The principle of extraterritorial jurisdiction applies, unless the individual has been tried in another country and the sentence has been served.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

There are additional obligations, such as reporting duties and confidentiality, when an investigation for money laundering or terrorism financing is taking place. For clients that have political exposure, the Organic Law requires that enhanced procedures of due diligence are undertaken. This obligation applies to those who are located or work where the banking, registry or commercial sector is protected, where there are no obligations of preventing money laundering of terrorism financing or entities and individuals whose residence is within tax havens or free zones. Entities are also obliged to retain for five years their client’s identification files, operations record and commercial correspondence for a period of five years.

Specifically in the banking sector, article 171.19 of the Decree-Law established the obligation of banking institutions and other individuals or entities to provide any information required by the Superintendence to fulfil its duties of supervision and vigilance. Article 7 of SUDEBAN’s Resolution requires the creation of a Comprehensive Risk Management System for Money Laundering, Terrorism Financing and Proliferation of Weapons of Mass Destruction depending on the nature of each entity.

In addition, several Government Agencies have set regulations aimed to establish risk prevention and control practices on money laundering, terrorism financing and financing for the proliferation of weapons of mass destruction, particularly in 2021, the following agencies enacted their own regulations on this matter for subject persons of their respective sector: Ministry of Tourism (Resolution No. 020 published in Official Gazette No. 42.106 of April 14th of 2021), Superintendence of Cryptocurrency – SUNACRIP for its initials in Spanish – (Providence No. 044-2021 published in Official Gazette No. 42.110 of April 21st of 2021), Superintendence for Insurance Activities – SUDEASEG for its initials in Spanish – (Providence No. SAA-8-004-2021 published in Official Gazette No. 42.128 May 17th of 2021) & Superintendence for Securities – SUNAVAL for its initials in Spanish – (Providence No. 209 published in Official Gazette No. 42.115 of April 28th of 2021). Finally, obliged entities must report to the National Financial Intelligence Unit in case they detect suspicious activity and cash operations, without disclosing these reports to their clients.

9. What are the potential penalties for failing to comply with these obligations?

The Organic Law establishes a penalty of between 3.000 and 5.000 Venezuelan Tax Units (UT for its initials in Spanish) if obligations are not complied with. The penalty for not providing the information required by the Superintendence as established in article 202.19 of the Decree-Law published on Official Gazette 40.557 is a fine of between 0.2% and 2% of their share capital. If an individual or entity violates any of the SUDEBAN Resolution’s provisions, the penalties applied will be those set forth to the Decree-Law, which in general terms may range from fees for legal entities to prison for individuals, as well as administrative restrictions on legal entities and their operations.

10. Who are the relevant enforcement authorities in Venezuela and what are their contact details?

The relevant enforcement entities are:

• The Nation’s Tribunals, National Office Against Organized Crime and Terrorism Financing (Oficina Nacional contra la Delincuencia Organizada y el Financiamiento al Terrorismo);
• Prosecutor’s Office against Money Laundering, Financial and Economic Crimes (Fiscalía contra Legitimación de Capitales, Delitos Financieros y Económicos).