Countries/Jurisdictions of Primary Concern - Spain
Spain is proactive in identifying, assessing, and understanding its money laundering risks and has effective mechanisms in most areas to mitigate these risks. There are a range of money laundering risks as Spain is a trans-shipment point for cross-border illicit flows of drugs entering Europe from North Africa and Central and South America. The most prominent means of laundering money are through the purchase and sale of real estate; the use of complex networks of companies and legal arrangements; the exploitation of money or value transfer services; and the use of cash couriers.
The major sources of criminal proceeds are related to drug trafficking, organized crime, customs offenses, human trafficking, counterfeit goods, and financial support for terrorism. Illicit proceeds continue to be invested in real estate in the once-booming coastal areas in the south and east of the country, but criminal groups also place money in other sectors, including services, communications, automobiles, art work, and the financial sector.
Moroccan hashish and Latin American cocaine enter the country and are distributed and sold throughout Europe, with the resulting proceeds often returned to Spain. Passengers traveling from Spain to Latin America reportedly smuggle sizeable sums of bulk cash. Informal money transfer services also facilitate cash transfers between Spain and Latin America, particularly Colombia. Law enforcement authorities cite an emerging trend in drugs and drug proceeds entering Spain from newer EU member states with less robust law enforcement capabilities.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: YES
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; mutual savings associations; credit companies; insurance companies; financial advisers; brokerage and securities firms; pension fund managers; collective investment schemes; postal services; currency exchange outlets; money exchangers or transmitters; realty agents; dealers in precious metals, stones, antiques, and art; legal advisors and lawyers; accountants; auditors; notaries; and casinos
Number of STRs received and time frame: 4,025 in 2013
Number of CTRs received and time frame: 801,267 in 2013
STR covered entities: Banks, professional money changers, credit intermediaries, payment systems and managers, and lending firms; life insurance entities and insurance companies that provide investment services; securities and investment service companies, collective investment, pension fund, and risk capital managers; mutual guarantee companies; postal wire services; real estate brokers, agents, and developers; auditors, accountants, and tax advisors; notaries and registrars of commercial and personal property; lawyers, attorneys, or other independent professionals when acting on behalf of clients in financial or real estate transactions; company formation and business agents; trustees; casinos, gaming and lottery enterprises; dealers of jewelry, precious stones and metals, art, and antiques; safekeeping or guaranty services; and foundations and associations
money laundering criminal Prosecutions/convictions:
Prosecutions: 64 in 2013
Convictions: 116 in 2013
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Spain is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/s-t/spain/documents/mer-spain-2014.html
Enforcement and implementation issues and comments:
Spain has long combated both domestic and foreign terrorist organizations, and Spanish law enforcement entities have identified various threat finance vulnerabilities, including donations to finance nonprofit organizations; establishment of publishing companies that print and distribute books or periodicals for propaganda purposes; fraudulent tax and financial assistance collections; the establishment of “cultural associations;” and alternative remittance system transfers. Other outlets such as small convenience stores and communication centers that often offer wire transfer services, are used to move money in and out of Spain by making small international transfers for members of the immigrant community. Spanish regulators also note the presence of hawala networks in the Muslim community. While AML/CFT supervision of banks appears to be robust, significant gaps regarding the identification of unlicensed operators, and the supervision of money or value transfer services operating under EU passporting rules remain. In May 2014, Spain approved regulations to implement its 2010 AML/CFT law.
Spain has a complex network of law enforcement agencies and intelligence services, including specialized units focused on money laundering, which are part of the Ministry of the Interior. Two national police forces, the National Police and the Civil Guard, have the authority to investigate all crimes nationwide and handle immigration matters.
The authorities and financial institutions consider the use of large cash sums a significant risk indicator of money laundering, notably related to tax avoidance. Carrying more than 100,000 euros (approximately $122,000) in cash within the country is subject to disclosure. If the authorities discover an amount larger than that, they can seize and hold it until an administrative economic sanction is provided. In 2013, 21 million euros (approximately $25.5 million) were seized in 667 interventions, and 8 million euros (approximately $9.7 million) in penalties were imposed. Cash transactions between businesses and professionals are restricted to less than 2,500 euros (approximately $3,040). Failure to comply with the restrictions can result in an administrative fine equivalent to 25 percent of the total value of the payment.
Spanish law does not allow civil forfeiture, but it has recognized and enforced foreign non-conviction based confiscation judgments presented by other countries. Moreover, even when no criminal punishment is imposed because the person is exempted from criminal accountability, such as by a statute of limitations, forfeiture may still be ordered in a criminal case if there is sufficient evidence of the illegal source of the assets. Finally, there is presumption of forfeiture for assets that are disproportionate in relation to the revenue lawfully obtained by persons who have been found guilty of terrorism offenses or felonies committed within a criminal or terrorist organization or group even if there is no conviction for the underlying offense generating those proceeds.
Spain is currently implementing Article 43 of its AML/CFT Law that creates a “Financial Ownership File,” a database that will have the date of account opening, the name of the account holder, the name of the beneficial owner, the name of the financial institution, and the branch location for all bank and securities accounts in Spain. The database is housed at the Bank of Spain, but will be under the control of the FIU, and will be available to law enforcement. All specified financial institutions will be required by law to provide the prescribed database information at regular intervals. It should be fully operational by 2016, but since 2013 has been in a pilot stage involving nine major Spanish bank conglomerates.
A number of different types of money laundering cases have been prosecuted, including those involving third party money laundering, self-laundering, and laundering the proceeds of both domestic and foreign predicate offenses. Spain has had success in disabling criminal enterprises and organized criminal groups by identifying and shutting down their complex money laundering networks of national and international companies. However, the relatively low level of sanctions actually imposed for money laundering offenses is a weakness, as is the limited capacity to handle complex money laundering cases in the judicial system in a timely fashion.