On October 9, Legislative Decree No. 426 was published in the Official Gazette, enacting the Special Law for the Prevention, Control, and Sanction of Money Laundering, Terrorism Financing, and the Financing of the Proliferation of Weapons of Mass Destruction (the “Law”). Its main purpose is to transform El Salvador’s anti-money laundering regime from a punitive system into a preventive, coordinated, and technologically strengthened model aligned with international standards.
1. Coordinated National System
The Law establishes the National System for the Prevention, Control, and Sanction of Money Laundering (SINAPLAFT), composed of key public institutions and obligated entities.
This system operates through the Interinstitutional Committee (CIPLAFT), chaired by the Attorney General, responsible for formulating national policies, coordinating risk assessments, and promoting cooperation among authorities.
Key powers include:
- Formulating national prevention strategies and plans.
- Promoting cooperation and information exchange among institutions.
- Recommending legal and regulatory reforms.
- Proposing inclusion or exclusion of obligated entities based on risk.
Any modification to obligated entities must be approved through legislative reform, ensuring legal certainty.
The Financial Investigation Unit (FIU) is strengthened with technical autonomy and expanded authority.
New FIU powers include:
- Direct access to financial and commercial databases.
- Issuing binding technical guidelines.
- Coordinating the National Risk Assessment (NRA).
- Exchanging information with foreign counterparts.
2. Obligated Entities: Key Inclusions and Exclusions
The Law adopts a risk-based approach to redefine obligated entities, focusing supervision on high-risk sectors.
Excluded sectors include agricultural import/export, travel agencies, construction, hotels, private security companies, and others. Pawnshops remain obligated only when primarily engaged in credit activities.
New obligated entities include fintech-related actors such as digital asset service providers, electronic money providers, investment fund managers, securitization companies, and cash transport services.
Non-profit organizations are subject to obligations only when deemed high-risk.
3. Duties and Rights of Obligated Entities
The Law promotes active prevention and risk-based compliance.
Key obligations include:
- Implementing internal risk-based prevention systems.
- Identifying beneficial owners (25% or more ownership).
- Registering compliance officers and committees.
- Reporting suspicious transactions within 24 hours.
- Ensuring confidentiality, training, and audits.
The Law also limits unjustified “de-risking” and promotes balanced access to financial services.
4. Supervision and Sanctions Regime
Supervision is sector-based and risk-oriented, led by different authorities depending on the entity.
- Superintendency of the Financial System (SSF)
- Superintendency of Commercial Obligations (SOM)
- Supreme Court, Accounting Council, CNAD, and Electoral Tribunal
Sanctions range from fines to disqualification or dissolution, depending on severity.
5. Compliance Office and Compliance Officer
The Law regulates the Compliance Officer role and requires certain entities to establish compliance offices.
Financial conglomerates may share a compliance officer under specific conditions.
Exceptions: Natural persons (e.g., lawyers, accountants, real estate agents) are not required to appoint a compliance officer but must comply with reporting obligations.
6. Risk-Based Approach
Entities must assess and mitigate risks according to their size, activity, and client profile.
7. Repeal
The Law repeals the 1998 Anti-Money Laundering Law but temporarily maintains existing regulations until new ones are approved.
The Law enters into force on October 21.
For more information, please contact our team at [email protected].