A Quick Guide to AML Compliance in Colombia

Individuals or corporations investing in Colombia—especially those in the finance, real estate, or digital sectors—must familiarize themselves with the country’s Anti-Money Laundering (AML) compliance requirements. In doing so, you’ll prevent issues with regulators and financial institutions, which can lead to sanctions and heavy fines.

Reporting entities are held to the following obligations to ensure transparency and operational best practices.

  • Risk assessments: Businesses should assess how their operations could be exposed to money laundering or illicit activity risks. This assessment should consider the potential financial sources or business activities that could expose the business to these risks, like receiving funds from third parties (which will require source verification) or working with service providers (who will require vetting). 
  • Customer Due Diligence (CDD): Customer due diligence involves knowing your customer (a process formally known in Colombia by the acronym KYC). Through this process, an entity verifies its customers’ identities and vets them, ensuring that doing business together will not imply money laundering or illicit activity risks. The basic identification process entails collecting data like a client’s name and address and verifying their identification documents. An enhanced due diligence (EDD) process, in cases of higher business risk, involves a more extensive collection of information, like the customer’s funding sources.
  • Internal Compliance & Employee Training: Entities must have clear internal procedures and policies that prevent and respond to compliance issues. Businesses should also train employees to work in line with AML regulations, learning to recognize money laundering and other illicit activities. Training should be periodic so that your employees are up-to-date with the country’s latest compliance regulations.
  • Record-keeping: Prepare to share your commitment to compliance with authorities by keeping clear transaction records and meticulously documenting your due diligence processes. Should your business run into a problem, you’ll be able to provide in-depth information on transactions and existing compliance measures.
  • Suspicious Transaction Reporting: Report any suspicious activities to UIAF, an entity that translates to the Financial Information and Analysis Unit. With employees trained in recognizing odd transactions or inconsistencies in third-party information, you’ll stay on top of reportable activities. Be sure to research what, if any, additional information your business should report to authorities, as suspicious transactions are just one concern. For example, your operation may be required to report international or significant money transfers.
  • Get audited: Perform the necessary independent audits to review your AML compliance procedures. Swiftly make changes if the audit surfaces inconsistencies or processes that could be improved.

Stay compliant and avoid setbacks

Protect your investments in Colombia by perfecting your business’s AML compliance processes. Get professional guidance by teaming up with the experts at LaGrande Global.