Law Regulating Activities of Non-Financial Designated Professions

OBJECTIVE AND SCOPE OF THE LAW. This Law has the objective of establishing the measures that, in accordance with the level of risk, must be implemented by natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD) to prevent being used or participating directly or indirectly in the crime of money laundering or financing of terrorism. Likewise, it establishes the competence of the National Commission of Banks and Insurance (CNBS) for the supervision, surveillance, and compliance with such measures by obligated subjects.

DEFINITIONS. For the purpose of this Law, the following terms are understood as:

• 1)

  APNFD: Non-Designated Financial Activities and Professions.

• 2)

  CIPLAFT: Inter-institutional Commission for the Prevention of Money Laundering and Financing of Terrorism.

• 3)

  CLIENT: All natural or legal persons with whom a permanent contractual relationship of a financial, economic, or commercial nature is established. In this sense, a Client is one who habitually develops business or transactions with Obligated Subjects.

• 4)

  CNBS: National Commission of Banks and Insurance.

• 5)

  INSTITUTIONS SUPERVISED BY THE CNBS: Those Institutions that are under the supervision, surveillance, and control of the National Commission of Banks and Insurance (CNBS), such as: State and private banks, financial companies, savings and loan associations, general deposit warehouses, currency exchange houses, stock brokerage firms, other savings and credit organizations, public or private pension administrators, insurance and reinsurance companies, credit associations, or any other Institution that engages in activities subject to and supervised by the (CNBS).

• 6)

  MONEY LAUNDERING: The process aimed at giving the appearance of legality to the product of criminal activities or concealing its illicit origin to guarantee its enjoyment by the offender.

• 7)

  OABI: Office of Administration of Seized Property.

• 8)

  SUSPICIOUS OPERATION: Transactions, commercial operations, regardless of whether they have been carried out or not, that are not consistent with the previously determined profile of the client, that are not related to professional or economic activity, that fall outside the parameters of normality established for a given market range, or that could suggest that the Client is engaging in activities that lack evident economic or legal basis, as well as those that are constituted or related to illicit activities, or that are considered may be intended for money laundering or financing of terrorism.

• 9)

  SELF-REGULATORY BODIES: Institutions or entities of public law that protect, associate, or organize natural or legal persons related by the activity or profession they develop.

• 10)

  RISK: For purposes of the risk-based approach, this is understood as the threat, vulnerability, or consequence of judicialization, intervention, attachment, discredit, or damage to which a supervised entity or Obligated Subject is exposed by being used, through its operations or services, as a means or instrument for money laundering or to facilitate the circulation of resources derived from terrorist activities.

• 11)

  OBLIGATED SUBJECTS: Understood as those natural or legal persons responsible for the prevention and detection of illicit activities through the fulfillment of obligations designed to identify, control, manage, or mitigate the risk of money laundering and financing of terrorism.

• 12)

  UIF: Financial Intelligence Unit.

• 13)

  URMOPRELAAFT: Unit dependent on the National Commission of Banks and Insurance (CNBS), responsible for maintaining the registry of natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD), their supervision, surveillance, and establishment of the measures that are estimated at the level of risk that such natural and legal persons must implement, in compliance with this Law, the Special Law Against the Crime of Money Laundering, Law Against Financing of Terrorism, and other provisions relating to the matter; and,

• 14)

  USER: All natural or legal persons with whom an occasional contractual relationship of a financial, economic, or commercial nature is established. In this sense, a User is one who habitually develops business or transactions with Obligated Subjects.

REQUIRED ACTIVITIES AND PROFESSIONS. The following are subject to this Law, the Special Law on Money Laundering, and the Law Against Financing of Terrorism and their regulations: natural or legal persons carrying out Non-Designated Financial Activities and Professions (APNFD), for the amount of Ten Thousand Dollars (US$ 10,000), the following:

• 1)

  Entities that provide international financial services operating in national territory not subject to supervision by the National Commission of Banks and Insurance (CNBS);

• 2)

  Companies that are lessees or concessionaires of postal or parcel services that perform currency transfer operations or transfers of various types of funds, securities, or money;

• 3)

  Entities that habitually engage in gambling operation activities, such as: casinos, slot machines, bingo, and lotteries, in traditional or electronic manner;

• 4)

  Those that provide money transfer and/or remittance services;

• 5)

  Those that habitually engage in the rental, purchase, and sale of real estate;

• 6)

  Those that engage in the purchase and sale of antiques, artwork, philatelic investment, or other luxury goods;

• 7)

  Those that engage in the purchase and sale of precious metals, the purchase, sale, manufacture, and naturalization of jewelry or goods made with precious metals;

• 8)

  Those that engage in the purchase, sale, rental, and distribution of: automobiles, aircraft, and maritime means of transport;

• 9)

  Those that habitually provide non-bank lending services;

• 10)

  Those whose activity is the transport or transfer of funds, securities, or money;

• 11)

  Those that provide vehicle and property shielding services;

• 12)

  Lawyers, Notaries, and Public Accountants when they carry out operations for their clients related to the activities of: purchase and sale of real estate; management of money, securities, and other assets, organization of contributions for the creation, operation, management, or purchase and sale of commercial companies; as well as the creation, operation, or management of their legal structures;

• 13)

  Savings and loan operations;

• 14)

  Systematic or substantial operations conducted in magnetic, telematic, telephone, or other forms of communication; issuance, sale, or purchase of traveler's checks, postal orders, or any other title or document representing value;

• 15)

  Systematic or substantial operations conducted in magnetic, telematic, telephone, or other forms of communication; issuance, sale, or purchase of traveler's checks, postal orders, or any other title or document representing value; 17) Sports clubs or associations; 18) International sporting events in which there is participation in ticket sales, except those of the International Federation of Association Football (FIFA) or those within the official sports structure; 19) Concerts or shows; 20) Hotels and pawnshops; 21) Stock exchange transactions; and, 22) Systematic or substantial transfers of funds and any other activity or transaction conducted under current or future circumstances or means.

DUTY OF INFORMATION. The commercial registries, municipal offices, and any state institution that authorizes, registers, affiliates, or grants permits or licenses for the operation of natural or legal persons whose activity or profession is considered Non-Designated Financial Activities and Professions (APNFD) must provide all information that the National Commission of Banks and Insurance (CNBS) requests in compliance with this Law. Those engaged in Non-Designated Financial Activities and Professions (APNFD), their supervision, surveillance, and establishment of the measures that are estimated at the level of risk that such natural and legal persons must implement, in compliance with this Law, the Special Law Against the Crime of Money Laundering, Law Against Financing of Terrorism, and other provisions relating to the matter; and,

AUTHORITY. The National Commission of Banks and Insurance (CNBS) is the public institution responsible for ensuring, through the Unit Responsible for the Registry, Monitoring and Prevention of Money Laundering and Financing of Terrorism (URMOPRELAAFT), compliance with this Law, the Law Against the Crime of Money Laundering, Law Against Financing of Terrorism, and other provisions relating to the matter, in those matters that are not the exclusive attribution of the Public Ministry and competent jurisdictional bodies.

COUNTRY RISK EVALUATION. The Inter-institutional Commission for the Prevention of Money Laundering and Financing of Terrorism (CIPLAFT), in compliance with the legal powers constituted in matters of prevention of Money Laundering and Financing of Terrorism (LA/FT), must formulate the national evaluation of such risk that includes its identification, analysis, and measurement, as well as the areas and sectors in which it manifests most. Through the regulation that is issued, the manner to maintain updated information must be established, as well as mechanisms to communicate the results to all competent authorities, supervised institutions, and natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD).

OBLIGATORY NATURE. The National Commission of Banks and Insurance (CNBS) has the responsibility of issuing and implementing the regulations and norms that are necessary for the fulfillment of the attributions established in this Law, taking into account, insofar as applicable, the country risk evaluation referred to in the previous Article.

SELF-REGULATORY BODIES. The National Commission of Banks and Insurance (CNBS), through the regulation it issues, must establish the requirements for those entities of public law that are associations or professional groups whose members carry out Non-Designated Financial Activities and Professions (APNFD) to be able to comply with the obligations established in this Law.

LEGAL REGIME. Natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD) must be governed by the precepts of this Law and, insofar as applicable, by the Law Against the Crime of Money Laundering, Law on the Definitive Deprivation of the Domain of Property of Illicit Origin, and the regulations and resolutions issued by the National Commission of Banks and Insurance (CNBS) and the Central Bank of Honduras (BCH). Matters not provided for in the laws, regulations, and resolutions shall be subject to what is established in the Commercial Code and, in the absence thereof, by the other laws in force in the Republic. CHAPTER II OBLIGATIONS AND REGISTRY

OBLIGATIONS. Natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD) must comply, as applicable, with the following obligations:

• 1)

  Register and update information for their complete identification;

• 2)

  Report transactions in cash, multiple, financial transactions, and suspicious operations in the established amounts;

• 3)

  Implement a Compliance Program that, as provided in the regulation, is appropriate to the internal order, structure, resources, and complexity of the operations of Non-Designated Financial Activities and Professions (APNFD), which must include:

  • a)

    Client Due Diligence;

  • b)

    Employee Due Diligence; and, c) Employee training. It must also include the responsibility to periodically verify the effectiveness of the same, in order to identify its deficiencies or needs for modification derived from changes in Honduran legislation, regulations, or respective internal policies;

• 4)

  Communicate to clients their reporting obligations as established in this Law; and,

• 5)

  Grant access to personnel of the National Commission of Banks and Insurance (CNBS) to all books and documents required to verify compliance with this Law. Likewise, personnel conducting the verifications may make notes, copies, photocopies, electronic reproductions, and verifications that are deemed necessary.

REGISTRY. All natural or legal persons carrying out activities and professions nominated in this Law as "APNFD's", after their constitution, professional registration, or granting of the license, must register in the Registry maintained by the National Commission of Banks and Insurance (CNBS) or the bodies authorized by it, in accordance with existing regulations for such purpose. The National Commission of Banks and Insurance (CNBS) by resolution must approve the formats and means for conducting the aforementioned registration, being essential to require: 1) In the case of merchants defined in Article 2 of the Commercial Code, proof of registration in the Chamber of Commerce of their domicile; and, 2) In the case of professions: proof of registration with the professional college or association to which they belong.

INDEPENDENCE OF REGISTRIES. The Registry referred to in this Law is independent of the mandatory public registries before other State entities.

MANDATORY PRESENTATION OF REGISTRY CERTIFICATE. For the issuance of the annual operating permit for natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD), municipalities must require proof of the updated Registry of the same before the National Commission of Banks and Insurance (CNBS) or before the bodies to which they belong.

REGISTRY UPDATE. Natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD) must update the information in the Registry annually by completing what is required by the regulation issued by the National Commission of Banks and Insurance (CNBS), within the following timeframe: 1) Natural persons who are owners of a commercial enterprise within the first fifteen (15) days of the month of February of each year; and, 2) Commercial companies established in accordance with the Commercial Code engaged in Non-Designated Financial Activities and Professions (APNFD) within fifteen (15) days following the holding of the General Assembly of Partners or Shareholders. In the event there are no changes or modifications, notice must simply be given to the National Commission of Banks and Insurance (CNBS) or bodies to which they belong.

REGISTRY UPDATE CHARGES. For the update of the registry established in the previous Article, natural or legal persons engaged in Non-Designated Financial Activities and Professions (APNFD) that exceed what is established in Article 3 of this Law must deliver to the General Treasury of the Republic the sum of Five Hundred Lempiras (L. 500.00) in the manner established by said Commission. Such funds must be used exclusively for the operation of the unit. The National Commission of Banks and Insurance (CNBS) must render an annual report to the National Congress on the management of such resources.

REPORT OF TRANSACTIONS. Natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) must register and report, in accordance with the guidelines for cash, multiple, financial and suspicious transactions, those operations carried out with users and clients in accordance with the regulations issued by the National Banking and Insurance Commission (CNBS), based on the Special Law on Money Laundering and the Law Against Terrorism Financing.

PRESERVATION OF DOCUMENTATION. Natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) must preserve the reports detailed in the previous Article by means of magnetic copy, photostat, photographic, microfilm or any other means of reproduction thereof, for a period of five (5) years. Compliance with this obligation by the National Banking and Insurance Commission (CNBS) is subject to the provisions of the Transparency and Access to Public Information Law.

EXEMPTION FROM LIABILITY. Natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD), their officers, directors or board members, owners, authorized representatives and employees, are exempt from civil, administrative and criminal liability for actions brought by their clients as a result of the report of the transactions detailed in this Law.

PROFESSIONAL CONFIDENTIALITY. For purposes of applying this Law and safeguarding the fundamental rights of the person, professional confidentiality cannot be invoked.

AVAILABILITY OF RECORDS. The reports established in this Law must be available to the Competent Authorities for use in the prevention of Money Laundering and Terrorism Financing.

CONFIDENTIALITY AND SECRECY. It is prohibited for natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) to inform any person of the fact that information has been requested by the competent authorities or provided to them. The official or employee of the natural or juridical person engaged in Designated Non-Financial Activities and Professions (APNFD) who fails to comply with the provisions of this disposition shall incur the crime of breach of confidence and must be sanctioned in accordance with the provisions of the Law Against the Crime of Money Laundering. Without prejudice to the responsibility that may be incurred for other crimes. The same responsibility is incurred by directors, managers, owners, legal mediators of natural persons and/or legal representatives of juridical persons who infringe the preceding prohibition.

POWERS OF THE NATIONAL BANKING AND INSURANCE COMMISSION (CNBS). The National Banking and Insurance Commission (CNBS), in addition to the powers conferred upon it by Law and other applicable laws regarding money laundering and terrorism financing, has the following powers:

• 1)

  To issue the regulations for the application of this Law;

• 2)

  To issue the methods and formats for registration and updating of natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD);

• 3)

  To issue the standards that contemplate the Regime of obligations, policies, control measures, surveillance, maintenance of records, identification of clients and periodicity of reports for Designated Non-Financial Activities and Professions (APNFD);

• 4)

  To immediately inform the Financial Intelligence Unit (UIF) when in the verification process carried out on natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) it identifies and determines that one or more operations carried out have characteristics to be considered suspicious;

• 5)

  To train natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) so that they comply with the provisions established in this Law;

• 6)

  To execute agreements with institutions of the public and private sector to facilitate the implementation of this Law; and,

• 7)

  To impose the sanctions established in the current legal framework.

CONFIDENTIALITY. In accordance with the provisions of the Law of the National Banking and Insurance Commission (CNBS), the members, officials and employees who work or have worked in the National Banking and Insurance Commission (CNBS) must maintain strict confidentiality regarding the papers, documents and information of natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) that come to their knowledge and that are handled therein. Similarly, in matters of money laundering and terrorism financing, it is prohibited to reveal any fact to persons other than the competent authorities or provided to them. The official or employee of the natural or juridical person engaged in Designated Non-Financial Activities and Professions (APNFD) who fails to comply with the provisions of this disposition shall incur the crime of breach of confidence and must be sanctioned in accordance with the provisions of the Law Against the Crime of Money Laundering. Without prejudice to the responsibility that may be incurred for other crimes. The same responsibility is incurred by directors, managers, owners, legal mediators of natural persons and/or legal representatives of juridical persons who infringe the preceding prohibition.

BUDGET. For the functioning of the Unit Responsible for Monitoring and Prevention of Money Laundering and Terrorism Financing (URMOPRELAAFT), resources must be included in the Budget of the National Banking and Insurance Commission (CNBS), exclusively to strengthen the prevention of Money Laundering and Terrorism Financing (LA/FT), as follows: 1) The amounts from the sanctions imposed by the National Banking and Insurance Commission (CNBS) on supervised institutions and on natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD); and, 2) The resources from the charges referred to in Article 15 of this Law. CHAPTER III SANCTIONING REGIME

SANCTIONS. Without prejudice to the criminal liability to which, in accordance with the legal framework, natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD) may be subject, the failure to comply with any of the obligations established in this Law must be sanctioned with the fine detailed below:

• 1)

  Up to Five Hundred Thousand Lempiras (L. 500,000.00), of two (2) to five (5) Minimum Wages;

• 2)

  From Five Hundred Thousand One Lempiras (L. 500,001.00) to Five Million Lempiras (L. 5,000,000.00), of six (6) to ten (10) Minimum Wages;

• 3)

  From Five Million One Lempira (L. 5,000,001.00) to Twenty Million Lempiras (L. 20,000,000.00), of eleven (11) to twenty (20) Minimum Wages;

• 4)

  From Twenty Million One Lempira (L. 20,000,001.00) to Fifty Million Lempiras (L. 50,000,000.00), of twenty-one (21) to fifty (50) Minimum Wages;

• 5)

  From Fifty Million One Lempira (L. 50,000,001.00) to Seventy-Five Million Lempiras (L. 75,000,000.00), of Fifty-One (51) to seventy-five (75) Minimum Wages; and,

• 6)

  From Seventy-Five Million Lempiras (L. 75,000,001.00) onwards, of Seventy-Six (76) to One Hundred (100) Minimum Wages. The minimum wage in effect for the zone of the region where the non-compliance occurs must be considered. For the imposition of these sanctions the National Banking and Insurance Commission (CNBS) must issue the corresponding regulation that ensures compliance with Article 82 of the Constitution of the Republic relating to the right of defense. Furthermore, it must determine the sanctions for infractions of indeterminate amount.

PUBLICITY. The sanctions imposed by the National Banking and Insurance Commission (CNBS) for non-compliance with this Law must be divulged by appropriate means of public dissemination. CHAPTER IV FINAL AND TRANSITORY PROVISIONS

IDENTIFICATION. The Obligated Subjects under this Law, within a period of one hundred eighty (180) days counted from its entry into force, must register with the National Banking and Insurance Commission (CNBS) or the association or business group to which they belong, and furthermore within the following one hundred twenty (120) days of their registration they must present a Plan and Schedule to comply with the provisions established in this Law. For the purpose of what is described here and immediately, the National Banking and Insurance Commission (CNBS) shall establish through resolution the procedures to be followed.

REGULATION. The National Banking and Insurance Commission (CNBS) must regulate this Law within One Hundred Twenty (120) days counted from its publication in the Official Gazette, La Gaceta, which must be socialized with natural or juridical persons engaged in Designated Non-Financial Activities and Professions (APNFD).

REPEAL. Articles 45 and 46 of the Law Against Terrorism Financing, contained in Decree No. 241-2010, or any other provision that opposes this Law are hereby repealed.

EFFECTIVE DATE. This Law shall enter into force thirty (30) days after its publication in the Official Gazette, La Gaceta. Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the ninth day of the month of December of two thousand fourteen. MAURICIO OLIVIA HERRERA PRESIDENT MARIO ALONSO PÉREZ LÒPEZ SECRETARY ROMÁN VILLEDA AGUILAR SECRETARY To the Executive Power. Therefore: Let it be executed. Tegucigalpa, M.D.C. March 23, 2015 JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICES OF HUMAN RIGHTS, JUSTICE, GOVERNANCE AND DECENTRALIZATION RIGOBERTO CHANG CASTILLO