## cr18315-colombiarosc

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---

### Key findings
- Colombia has a reasonable understanding of its main domestic money laundering/terrorist financing (ML/TF) risks, relying particularly on the results of the 2013 and 2016 National Risk Assessments (NRAs).
- The 2016 NRA has yielded reasonable findings with respect to the identification of the main ML threats and vulnerabilities.
- The AML/CFT supervisory systems and tools are not entirely in line with the risk-based approach (RBA), and there are significant gaps in the supervision of designated non-financial businesses and professions (DNFBPs).
- Colombia investigates and prosecutes ML effectively, but not in a manner that is commensurate with its ML risks.
- The main TF threat in Colombia is the proceeds-generating criminal activities of domestic organized armed groups (Grupos Armados Organizados—GAOS). The primary source of funds for domestic criminal organizations are drug trafficking and other criminal activities.
- The financial intelligence produced by the Financial Analysis and Information Unit (Unidad de Información y Análisis Financiero—UIAF) is generally a key input to initiate investigations regarding predicate offenses and tracing assets, especially such financial intelligence generated upon the request of the Fiscalía General de la Nación (FGN—Public Prosecutor ́s Office). Spontaneously disseminated UIAF intelligence has led to less ML cases and no TF cases.
- There are significant deficiencies in the customer due diligence (CDD) framework and its implementation, as well as in enhanced risk mitigation measures under the existing AML/CFT framework, negatively impacting the overall effectiveness of preventive measures.
- The UIAF can accede to various types of financial information that allows it to produce financial intelligence of good quality.
- Overall, financial institutions have a reasonable understanding of ML risks and of AML obligations; DNFBPs, except for casinos, have a lower level of awareness of ML/TF risks and obligations than financial institutions.
- Confiscation and asset forfeiture are pursued as a priority policy objective. Law enforcement agencies (LEAs) are well trained and have adequate skills and resources to trace and recover proceeds of crime (POC). Asset forfeiture (extinción de dominio) is being applied with important results. Colombia has an effective system for managing the POC as well.
- Colombia has a legal framework to apply targeted financial sanctions (TFS) related to TF, but its framework for TFS related to the financing of proliferation of weapons of mass destruction (WMD) has technical and operational deficiencies.
- While basic information of legal persons is updated annually and accessible in the public registries and supervisors ́ databases, the authorities have difficulty obtaining accurate and up-to-date information on the beneficial ownership (BO) of complex corporate structures and when there is foreign ownership or control involved.
- Overall, Colombia provides timely, good quality, and constructive mutual legal assistance and extradition. Constructive international cooperation is provided timely both upon request and spontaneously.

### Risks and general situation
- Colombia’s main ML threat comes from organized crime groups.
- The most vulnerable sectors are banking, gold mining, lawyers, real estate, accountants, statutory auditors (revisores fiscales), auditors, and the real sector.
- Financial institutions (banks, securities, and insurance firms, as well as savings and loans cooperatives) have a good understanding of ML risks; DNFBPs generally have a lower level of understanding of ML risks than financial institutions.
- Both financial institutions and DNFBPs appear to have less understanding of TF risks.
- A RBA to AML/CFT supervision has been applied to varying degrees and is most advanced at the Financial Superintendent of Colombia (Superintendencia Financiera de Colombia—SFC). Other supervisory agencies are still developing adequate supervisory frameworks and cannot yet demonstrate effectiveness in mitigating risks.
- The main TF threat is proceeds-generating criminal activity of GAOS, using drug trafficking, kidnapping, extortion, and other crimes as sources of income.
- Authorities deem the risk for TF as medium to high, but the assessment of TF risk in the NRA is insufficient. LEAs have a better understanding of TF risks than supervisory agencies; awareness of TF risks by supervisors is generally low.

### Findings on compliance and effectiveness (A.–G.)
- A. Assessment of Risk, Coordination, and Policy Setting
  - Colombia has made significant efforts to identify, assess, and understand its ML/TF risks, mainly based on the 2013 and 2016 NRAs.
  - The NRAs broadly address main threats and vulnerabilities but did not factor in other relevant threats nor properly assess certain risks (e.g., risks associated with simplified joint stock companies (sociedades anónimas simplificadas—SAS), tax evasion, the informal sector, and foreign-origin threats).
  - National coordination and cooperation on AML/CFT at a policy level has improved since the 2008 mutual evaluation and is relatively sound; operational cooperation is partially fragmented and inadequately coordinated.
  - Specific measures to prevent or mitigate ML/TF risks based on the 2016 NRA findings have not yet been implemented, in part because the adoption of revised policy depends on a wider government decision.
  - Other AML/CFT policies are included in public documents such as the National Development Plan 2014–2018.
- B. Financial Intelligence, and ML Investigations, Prosecutions and Confiscation
  - The UIAF conducts high-quality operational and strategic analysis and supports LEAs both spontaneously and upon request.
  - Spontaneously disseminated UIAF intelligence has resulted in a limited number of ML and predicate crime investigations and no TF investigations.
  - UIAF collaboration with LEAs supports asset forfeiture cases and ML investigations; UIAF has access to a wide range of information sources and authority to request information from reporting entities and other authorities.
  - UIAF has an effective process for prioritizing and analyzing suspicious transaction reports (STRs), but use of financial intelligence is negatively affected by poor STR quality from certain reporting entities, inexperience of some reporting entities, and insufficient reporting by some DNFBPs.
  - Colombian authorities can investigate and prosecute ML using a wide range of legal tools and well-resourced investigative bodies; however, most cases involve simple ML schemes comprising low amounts of funds and are primarily related to illegal drug trafficking.
  - The number of ML investigations and prosecutions is rising but remains insufficient given Colombia’s ML risk profile.
  - Colombia has a robust legal framework for confiscating and forfeiting POC; asset forfeiture proceedings are autonomous and independent from criminal prosecution.
  - There is room for improvement regarding confiscation of proceeds moved to other countries and repatriation of assets; at the time of the onsite visit, there were no cases of sharing of confiscated proceeds with foreign counterparts.
  - Colombia seizes, forfeits, and confiscates currency falsely declared or not disclosed during cross-border movements.
- C. Terrorist Financing and Proliferation Financing
  - A significant number of terrorist acts committed indicates a high risk for domestic TF.
  - TF offense is investigated and prosecuted to a limited extent; there have been some significant TF convictions, but standalone TF investigations and prosecutions are few relative to the magnitude of the threat.
  - Colombia has established a registration regime for nonprofit organizations (NPOs), but risk-based supervision or monitoring for CFT is lacking.
  - Colombia has not identified the subset of organizations falling under the FATF definition of NPOs at risk for TF abuse.
  - Colombian legislation requires circulation of UN sanctions lists to competent authorities and freezing through judicial proceedings under the Asset Forfeiture Law (AFL). Authorities have not received notifications relating to assets of persons designated pursuant to UNSCRs and have not yet designated any person under UNSCRs 1267 or 1373.
  - AFL can only be applied to assets linked to criminal offenses; it cannot be applied to assets of persons/entities designated by the UN in PF lists, creating a gap for PF-related freezing.
- D. Preventive Measures and Supervision
  - Significant gaps in the legal framework negatively impact effective implementation of preventive measures: postal transfer operators are not explicitly listed as reporting entities and therefore are not legally required to apply AML/CFT measures, including CDD.
  - There are shortcomings regarding identification and verification of the beneficial owner, with no requirement to collect BO information in all cases.
  - Financial institutions and DNFBPs classified as reporting entities generally apply adequate risk mitigation measures for PEPs, correspondent banking, new technologies, wire transfer rules, and TFS related to TF.
  - Financial institutions generally understand obligations imposed by the Sistema de Administración del Riesgo de Lavado de Activos y de la Financiación del Terrorismo or equivalent risk management systems, including enhanced due diligence and record-keeping.
  - Shortcomings were identified with respect to reporting attempted transactions among financial institutions and DNFBPs.
  - Several categories of DNFBPs are not considered reporting entities under the existing AML/CFT framework and are not subject to AML/CFT obligations.
- E. Supervision
  - Supervisors’ understanding of ML/TF risks is still evolving; most are well informed of main ML threats but awareness of TF risks affecting their sectors is generally low.
  - None of the risk-based supervisory models specifically assess exposure to TF.
  - Most supervisors focus on domestic threats and do not adequately account for foreign-sourced risks.
  - The licensing regime, including fit and proper checks on owners and directors of financial institutions and DNFBPs, appears robust for Colombian nationals but less stringent for foreign beneficial owners.
  - Scope limitations in Colombia’s AML/CFT legal framework for financial institutions and most DNFBP sectors constrain supervisors’ understanding of sectoral risks and their effectiveness in risk mitigation.
- F. Transparency of Legal Persons and Arrangements
  - Basic information of legal persons is updated annually and accessible in public registries and supervisors’ databases.
  - Authorities have difficulty obtaining accurate and up-to-date information on beneficial ownership of complex corporate structures and when foreign ownership or control is involved.
- G. International Cooperation
  - Overall, Colombia provides timely, good quality, and constructive mutual legal assistance and extradition.
  - Colombia’s approach to international cooperation is proactive and collaborative; constructive international cooperation is provided timely both upon request and spontaneously.

### Priority actions (summary from Section 1)
- Implement specific measures based on the 2016 NRA to mitigate ML/TF risks.
- Address legal framework gaps:
  - explicitly include postal transfer operators as reporting entities;
  - require collection and verification of beneficial ownership information in all relevant cases.
- Strengthen supervisory frameworks and tools to fully align with the RBA, with special focus on DNFBPs and TF risks.
- Improve quality and coverage of STRs from reporting entities and strengthen reporting by DNFBPs.
- Enhance standalone TF investigation and prosecution capacity and improve risk-based supervision and monitoring of NPOs.
- Address limitations in applying TFS for proliferation financing where AFL cannot reach assets of UN-designated persons/entities.
- Improve mechanisms for confiscation of proceeds moved to other countries, repatriation of assets, and sharing of confiscated proceeds with foreign counterparts.

### Coverage gaps and supervision (Section 2)
- Many lawyers, accountants, real estate agents, and dealers in precious metals and stones (except in relation to gold) are outside the scope of the AML/CFT regime.
- The application of proportionate and dissuasive sanctions across all sectors is generally weak, with more reliance placed on warning letters than other more stringent administrative sanctions and fines.
- The SFC has improved its risk-based framework for offsite and onsite AML/CFT supervision in recent years.
- Other supervisors are still developing their offsite risk identification and assessment systems and cannot yet demonstrate their effectiveness in mitigating risks and compliance supervision.
- Supervisors face emerging challenges in adapting their risk assessment and mitigation systems to take account of the integration of ex-Fuerzas Armadas Revolucionarias de Colombia-Ejército del Pueblo (Revolutionary Armed Forces of Colombia-People’s Army) members into the formal financial system, including their control of credit unions.

### Transparency of legal persons and arrangements (Section 2)
- Basic information of all legal persons held by registries is publicly available and is updated every year by the legal entities.
- Back-up documents kept by registries are not public but are easily obtained by the authorities when requested.
- Shareholder information of legal persons is obtained easily and in a timely fashion by authorities using different sources, such as public registries, books of shareholders, and supervisors’ databases.
- Beneficial owner (BO) information of legal persons is only partially available:
  - Authorities may get BO information from these sources for simple corporate structures.
  - Authorities have limitations to get BO information for complex corporate structures and when there is foreign ownership or control involved.
- Authorities have adopted several types of measures to prevent the misuse of legal persons, including strict regulations, supervision, powers of supervisors, and easy access to information of legal persons.
- Bearer shares are not allowed.
- Currently, 54 percent of the commercial companies are SAS, which only require a simple private document for their creation.
  - The ML/TF risks arising from this type of company have not been analyzed by the authorities.
- Fiduciae are an important financial market and only licensed fiduciary companies (26) can provide fiduciary services.
  - All information on the participants and terms of the fiduciae must be updated in the SFC registries.
  - Fiduciary services face a high ML risk, but there are no requirements for enhanced AML/CFT mitigation measures specific for this sector beyond the regular obligations for financial institutions.
  - Specific measures ultimately depend on internal rules of each fiduciary company.

### International cooperation (Section 2)
- Colombia has a robust legal and institutional framework, which allows competent authorities to provide constructive, good quality, and timely mutual legal assistance and extradition to third countries.
- The Colombian approach to international cooperation is overall proactive and collaborative.
- International cooperation is provided both upon request and spontaneously.
- LEAs’ procedures for protecting information, prioritizing, and executing international cooperation requests are in place and adequate.
- Colombia regularly submits extradition requests to other countries related to ML, TF, and terrorism, as well as for asset forfeiture.
- Financial supervisory authorities, the UIAF, and other LEAs exchange information with their foreign counterparts and implement measures to protect the confidentiality of the information.
- The implementation of international cooperation procedures of the Dirección de Impuestos y Aduanas Nacionales (National Tax and Customs Office) could be further improved.
- Colombia can identify and exchange basic information on domestic legal persons and arrangements.
  - Regarding BO information, shortcomings related to its availability would limit Colombia’s ability to respond in a timely manner to specific foreign requests in this regard.

### Priority actions (Section 2)
- Extend the scope and approach of the NRA to provide for a more in-depth ML/TF threat and vulnerability analysis to cover additional areas (e.g., tax evasion, foreign threats, and cross-border financial flows, among others).
- Articulate a national AML/CFT policy with clear objectives, timeline, and allocation of responsibilities, as well as a mechanism to monitor/measure progress and maintain more comprehensive statistics.
- Improve implementation of risk mitigating measures, including for enhanced measures, and fully extend AML/CFT requirements to sectors that are completely or partly out-of-scope, including unregulated lenders, internet casinos, real estate intermediaries, lawyers, accountants, and dealers in precious metals and stones.
- Fully implement the risk-based supervisory systems for all financial institutions and DNFBP sectors, including with respect to onsite inspections and cross-border supervision of financial groups.
- The UIAF should support the requirements of LEAs for ML/TF investigations to a greater extent.
- The UIAF should systematically provide feedback to supervisors and reporting entities regarding the quality of STRs.
- Establish a mechanism to maintain accurate and updated information on beneficial owners readily available to competent authorities.
- Colombia should widen the scope of the ML investigations to extend to cases where the underlying criminal activities are different from drug trafficking, at least to those that have been indicated as a high risk in the NRA.
- Enhance the use of available legal measures to combat TF offense and not rely only on alternative judicial measures to tackle TF activities.
- Require physical and legal persons, not only reporting entities, to implement the UCSCRs on TF and PF for WMD.
- Colombia should strengthen its capacity to provide international cooperation on BO information.

### Compliance and effectiveness ratings
- Compliance Ratings:
  - R.1: LC
  - R.2: LC
  - R.3: LC
  - R.4: C
  - R.5: LC
  - R.6: PC
  - R.7: NC
  - R.8: PC
  - R.9: C
  - R.10: PC
  - R.11: C
  - R.12: PC
  - R.13: PC
  - R.14: C
  - R.15: PC
  - R.16: PC
  - R.17: N/A
  - R.18: C
  - R.19: PC
  - R.20: LC
  - R.21: C
  - R.22: PC
  - R.23: PC
  - R.24: PC
  - R.25: LC
  - R.26: LC
  - R.27: LC
  - R.28: PC
  - R.29: LC
  - R.30: C
  - R.31: C
  - R.32: LC
  - R.33: PC
  - R.34: PC
  - R.35: PC
  - R.36: LC
  - R.37: LC
  - R.38: C
  - R.39: LC
  - R.40: LC
- Effectiveness Ratings:
  - IO.1: Sub
  - IO.2: Sub.
  - IO.3: Mod.
  - IO.4: Mod.
  - IO.5: Mod.
  - IO.6: Sub.
  - IO.7: Low
  - IO.8: Sub.
  - IO.9: Low
  - IO.10: Mod.
  - IO.11: Low

*Source: IMF Country Report No. 18/315, Report on the Observance of Standards and Codes—FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism for Colombia (assessment completed June 2017).*

### Section 1

### cr18315-colombiarosc - Section 1

### Key findings
- Colombia has a reasonable understanding of its main domestic money laundering/terrorist financing (ML/TF) risks, relying particularly on the results of the 2013 and 2016 National Risk Assessments (NRAs).
- The 2016 NRA has yielded reasonable findings with respect to the identification of the main ML threats and vulnerabilities.
- The AML/CFT supervisory systems and tools are not entirely in line with the risk-based approach (RBA), and there are significant gaps in the supervision of designated non-financial businesses and professions (DNFBPs).
- Colombia investigates and prosecutes ML effectively, but not in a manner that is commensurate with its ML risks.
- The main TF threat in Colombia is the proceeds-generating criminal activities of domestic organized armed groups (Grupos Armados Organizados—GAOS). The primary source of funds for domestic criminal organizations are drug trafficking and other criminal activities.
- The financial intelligence produced by the Financial Analysis and Information Unit (Unidad de Información y Análisis Financiero—UIAF) is generally a key input to initiate investigations regarding predicate offenses and tracing assets, especially such financial intelligence generated upon the request of the Fiscalía General de la Nación (FGN—Public Prosecutor ́s Office). Spontaneously disseminated UIAF intelligence has led to less ML cases and no TF cases.
- There are significant deficiencies in the customer due diligence (CDD) framework and its implementation, as well as in enhanced risk mitigation measures under the existing AML/CFT framework, negatively impacting the overall effectiveness of preventive measures.
- The UIAF can accede to various types of financial information that allows it to produce financial intelligence of good quality.
- Overall, financial institutions have a reasonable understanding of ML risks and of AML obligations; DNFBPs, except for casinos, have a lower level of awareness of ML/TF risks and obligations than financial institutions.
- Confiscation and asset forfeiture are pursued as a priority policy objective. Law enforcement agencies (LEAs) are well trained and have adequate skills and resources to trace and recover proceeds of crime (POC). Asset forfeiture (extinción de dominio) is being applied with important results. Colombia has an effective system for managing the POC as well.
- Colombia has a legal framework to apply targeted financial sanctions (TFS) related to TF, but its framework for TFS related to the financing of proliferation of weapons of mass destruction (WMD) has technical and operational deficiencies.
- While basic information of legal persons is updated annually and accessible in the public registries and supervisors ́ databases, the authorities have difficulty obtaining accurate and up-to-date information on the beneficial ownership (BO) of complex corporate structures and when there is foreign ownership or control involved.
- Overall, Colombia provides timely, good quality, and constructive mutual legal assistance and extradition. Constructive international cooperation is provided timely both upon request and spontaneously.

### Risks and general situation
- Colombia’s main ML threat comes from organized crime groups.
- The most vulnerable sectors are banking, gold mining, lawyers, real estate, accountants, statutory auditors (revisores fiscales), auditors, and the real sector.
- Financial institutions (banks, securities, and insurance firms, as well as savings and loans cooperatives) have a good understanding of ML risks; DNFBPs generally have a lower level of understanding of ML risks than financial institutions.
- Both financial institutions and DNFBPs appear to have less understanding of TF risks.
- A RBA to AML/CFT supervision has been applied to varying degrees and is most advanced at the Financial Superintendent of Colombia (Superintendencia Financiera de Colombia—SFC). Other supervisory agencies are still developing adequate supervisory frameworks and cannot yet demonstrate effectiveness in mitigating risks.
- The main TF threat is proceeds-generating criminal activity of GAOS, using drug trafficking, kidnapping, extortion, and other crimes as sources of income.
- Authorities deem the risk for TF as medium to high, but the assessment of TF risk in the NRA is insufficient. LEAs have a better understanding of TF risks than supervisory agencies; awareness of TF risks by supervisors is generally low.

### Findings on compliance and effectiveness

A. Assessment of Risk, Coordination, and Policy Setting
- Colombia has made significant efforts to identify, assess, and understand its ML/TF risks, mainly based on the 2013 and 2016 NRAs.
- The NRAs broadly address main threats and vulnerabilities but did not factor in other relevant threats nor properly assess certain risks (e.g., risks associated with simplified joint stock companies (sociedades anónimas simplificadas—SAS), tax evasion, the informal sector, and foreign-origin threats).
- National coordination and cooperation on AML/CFT at a policy level has improved since the 2008 mutual evaluation and is relatively sound; operational cooperation is partially fragmented and inadequately coordinated.
- Specific measures to prevent or mitigate ML/TF risks based on the 2016 NRA findings have not yet been implemented, in part because the adoption of revised policy depends on a wider government decision.
- Other AML/CFT policies are included in public documents such as the National Development Plan 2014–2018.

B. Financial Intelligence, and ML Investigations, Prosecutions and Confiscation
- The UIAF conducts high-quality operational and strategic analysis and supports LEAs both spontaneously and upon request.
- Spontaneously disseminated UIAF intelligence has resulted in a limited number of ML and predicate crime investigations and no TF investigations.
- UIAF collaboration with LEAs supports asset forfeiture cases and ML investigations; UIAF has access to a wide range of information sources and authority to request information from reporting entities and other authorities.
- UIAF has an effective process for prioritizing and analyzing suspicious transaction reports (STRs), but use of financial intelligence is negatively affected by poor STR quality from certain reporting entities, inexperience of some reporting entities, and insufficient reporting by some DNFBPs.
- Colombian authorities can investigate and prosecute ML using a wide range of legal tools and well-resourced investigative bodies; however, most cases involve simple ML schemes comprising low amounts of funds and are primarily related to illegal drug trafficking.
- The number of ML investigations and prosecutions is rising but remains insufficient given Colombia’s ML risk profile.
- Colombia has a robust legal framework for confiscating and forfeiting POC; asset forfeiture proceedings are autonomous and independent from criminal prosecution.
- There is room for improvement regarding confiscation of proceeds moved to other countries and repatriation of assets; at the time of the onsite visit, there were no cases of sharing of confiscated proceeds with foreign counterparts.
- Colombia seizes, forfeits, and confiscates currency falsely declared or not disclosed during cross-border movements.

C. Terrorist Financing and Proliferation Financing
- A significant number of terrorist acts committed indicates a high risk for domestic TF.
- TF offense is investigated and prosecuted to a limited extent; there have been some significant TF convictions, but standalone TF investigations and prosecutions are few relative to the magnitude of the threat.
- Colombia has established a registration regime for nonprofit organizations (NPOs), but risk-based supervision or monitoring for CFT is lacking.
- Colombia has not identified the subset of organizations falling under the FATF definition of NPOs at risk for TF abuse.
- Colombian legislation requires circulation of UN sanctions lists to competent authorities and freezing through judicial proceedings under the Asset Forfeiture Law (AFL). Authorities have not received notifications relating to assets of persons designated pursuant to UNSCRs and have not yet designated any person under UNSCRs 1267 or 1373.
- AFL can only be applied to assets linked to criminal offenses; it cannot be applied to assets of persons/entities designated by the UN in PF lists, creating a gap for PF-related freezing.

D. Preventive Measures and Supervision
- Significant gaps in the legal framework negatively impact effective implementation of preventive measures: postal transfer operators are not explicitly listed as reporting entities and therefore are not legally required to apply AML/CFT measures, including CDD.
- There are shortcomings regarding identification and verification of the beneficial owner, with no requirement to collect BO information in all cases.
- Financial institutions and DNFBPs classified as reporting entities generally apply adequate risk mitigation measures for PEPs, correspondent banking, new technologies, wire transfer rules, and TFS related to TF.
- Financial institutions generally understand obligations imposed by the Sistema de Administración del Riesgo de Lavado de Activos y de la Financiación del Terrorismo or equivalent risk management systems, including enhanced due diligence and record-keeping.
- Shortcomings were identified with respect to reporting attempted transactions among financial institutions and DNFBPs.
- Several categories of DNFBPs are not considered reporting entities under the existing AML/CFT framework and are not subject to AML/CFT obligations.

E. Supervision
- Supervisors’ understanding of ML/TF risks is still evolving; most are well informed of main ML threats but awareness of TF risks affecting their sectors is generally low.
- None of the risk-based supervisory models specifically assess exposure to TF.
- Most supervisors focus on domestic threats and do not adequately account for foreign-sourced risks.
- The licensing regime, including fit and proper checks on owners and directors of financial institutions and DNFBPs, appears robust for Colombian nationals but less stringent for foreign beneficial owners.
- Scope limitations in Colombia’s AML/CFT legal framework for financial institutions and most DNFBP sectors constrain supervisors’ understanding of sectoral risks and their effectiveness in risk mitigation.

F. Transparency of Legal Persons and Arrangements
- Basic information of legal persons is updated annually and accessible in public registries and supervisors’ databases.
- Authorities have difficulty obtaining accurate and up-to-date information on beneficial ownership of complex corporate structures and when foreign ownership or control is involved.

G. International Cooperation
- Overall, Colombia provides timely, good quality, and constructive mutual legal assistance and extradition.
- Colombia’s approach to international cooperation is proactive and collaborative; constructive international cooperation is provided timely both upon request and spontaneously.

### Priority actions (summary of issues highlighted)
- Implement specific measures based on the 2016 NRA to mitigate ML/TF risks.
- Address legal framework gaps: explicitly include postal transfer operators as reporting entities; require collection and verification of beneficial ownership information in all relevant cases.
- Strengthen supervisory frameworks and tools to fully align with the RBA, with special focus on DNFBPs and TF risks.
- Improve quality and coverage of STRs from reporting entities and strengthen reporting by DNFBPs.
- Enhance standalone TF investigation and prosecution capacity and improve risk-based supervision and monitoring of NPOs.
- Address limitations in applying TFS for proliferation financing where AFL cannot reach assets of UN-designated persons/entities.
- Improve mechanisms for confiscation of proceeds moved to other countries, repatriation of assets, and sharing of confiscated proceeds with foreign counterparts.

*Source: IMF Country Report No. 18/315, Report on the Observance of Standards and Codes—FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism for Colombia (assessment completed June 2017).*

### Section 2

### Section 2

### Coverage gaps and supervision
- Many lawyers, accountants, real estate agents, and dealers in precious metals and stones (except in relation to gold) are outside the scope of the AML/CFT regime.
- The application of proportionate and dissuasive sanctions across all sectors is generally weak, with more reliance placed on warning letters than other more stringent administrative sanctions and fines.
- The SFC has improved its risk-based framework for offsite and onsite AML/CFT supervision in recent years.
- Other supervisors are still developing their offsite risk identification and assessment systems and cannot yet demonstrate their effectiveness in mitigating risks and compliance supervision.
- Supervisors face emerging challenges in adapting their risk assessment and mitigation systems to take account of the integration of ex-Fuerzas Armadas Revolucionarias de Colombia-Ejército del Pueblo (Revolutionary Armed Forces of Colombia-People’s Army) members into the formal financial system, including their control of credit unions.

### Transparency of legal persons and arrangements
- Basic information of all legal persons held by registries is publicly available and is updated every year by the legal entities.
- Back-up documents kept by registries are not public but are easily obtained by the authorities when requested.
- Shareholder information of legal persons is obtained easily and in a timely fashion by authorities using different sources, such as public registries, books of shareholders, and supervisors’ databases.
- Beneficial owner (BO) information of legal persons is only partially available:
  - Authorities may get BO information from these sources for simple corporate structures.
  - Authorities have limitations to get BO information for complex corporate structures and when there is foreign ownership or control involved.
- Authorities have adopted several types of measures to prevent the misuse of legal persons, including strict regulations, supervision, powers of supervisors, and easy access to information of legal persons.
- Bearer shares are not allowed.
- Currently, 54 percent of the commercial companies are SAS, which only require a simple private document for their creation.
  - The ML/TF risks arising from this type of company have not been analyzed by the authorities.
- Fiduciae are an important financial market and only licensed fiduciary companies (26) can provide fiduciary services.
  - All information on the participants and terms of the fiduciae must be updated in the SFC registries.
  - Fiduciary services face a high ML risk, but there are no requirements for enhanced AML/CFT mitigation measures specific for this sector beyond the regular obligations for financial institutions.
  - Specific measures ultimately depend on internal rules of each fiduciary company.

### International cooperation
- Colombia has a robust legal and institutional framework, which allows competent authorities to provide constructive, good quality, and timely mutual legal assistance and extradition to third countries.
- The Colombian approach to international cooperation is overall proactive and collaborative.
- International cooperation is provided both upon request and spontaneously.
- LEAs’ procedures for protecting information, prioritizing, and executing international cooperation requests are in place and adequate.
- Colombia regularly submits extradition requests to other countries related to ML, TF, and terrorism, as well as for asset forfeiture.
- Financial supervisory authorities, the UIAF, and other LEAs exchange information with their foreign counterparts and implement measures to protect the confidentiality of the information.
- The implementation of international cooperation procedures of the Dirección de Impuestos y Aduanas Nacionales (National Tax and Customs Office) could be further improved.
- Colombia can identify and exchange basic information on domestic legal persons and arrangements.
  - Regarding BO information, shortcomings related to its availability would limit Colombia’s ability to respond in a timely manner to specific foreign requests in this regard.

### Priority actions
- Extend the scope and approach of the NRA to provide for a more in-depth ML/TF threat and vulnerability analysis to cover additional areas (e.g., tax evasion, foreign threats, and cross-border financial flows, among others).
- Articulate a national AML/CFT policy with clear objectives, timeline, and allocation of responsibilities, as well as a mechanism to monitor/measure progress and maintain more comprehensive statistics.
- Improve implementation of risk mitigating measures, including for enhanced measures, and fully extend AML/CFT requirements to sectors that are completely or partly out-of-scope, including unregulated lenders, internet casinos, real estate intermediaries, lawyers, accountants, and dealers in precious metals and stones.
- Fully implement the risk-based supervisory systems for all financial institutions and DNFBP sectors, including with respect to onsite inspections and cross-border supervision of financial groups.
- The UIAF should support the requirements of LEAs for ML/TF investigations to a greater extent.
- The UIAF should systematically provide feedback to supervisors and reporting entities regarding the quality of STRs.
- Establish a mechanism to maintain accurate and updated information on beneficial owners readily available to competent authorities.
- Colombia should widen the scope of the ML investigations to extend to cases where the underlying criminal activities are different from drug trafficking, at least to those that have been indicated as a high risk in the NRA.
- Enhance the use of available legal measures to combat TF offense and not rely only on alternative judicial measures to tackle TF activities.
- Require physical and legal persons, not only reporting entities, to implement the UCSCRs on TF and PF for WMD.
- Colombia should strengthen its capacity to provide international cooperation on BO information.

### Compliance and effectiveness ratings
- Compliance Ratings:
  - R.1: LC
  - R.2: LC
  - R.3: LC
  - R.4: C
  - R.5: LC
  - R.6: PC
  - R.7: NC
  - R.8: PC
  - R.9: C
  - R.10: PC
  - R.11: C
  - R.12: PC
  - R.13: PC
  - R.14: C
  - R.15: PC
  - R.16: PC
  - R.17: N/A
  - R.18: C
  - R.19: PC
  - R.20: LC
  - R.21: C
  - R.22: PC
  - R.23: PC
  - R.24: PC
  - R.25: LC
  - R.26: LC
  - R.27: LC
  - R.28: PC
  - R.29: LC
  - R.30: C
  - R.31: C
  - R.32: LC
  - R.33: PC
  - R.34: PC
  - R.35: PC
  - R.36: LC
  - R.37: LC
  - R.38: C
  - R.39: LC
  - R.40: LC
- Effectiveness Ratings:
  - IO.1: Sub
  - IO.2: Sub.
  - IO.3: Mod.
  - IO.4: Mod.
  - IO.5: Mod.
  - IO.6: Sub.
  - IO.7: Low
  - IO.8: Sub.
  - IO.9: Low
  - IO.10: Mod.
  - IO.11: Low

*International Monetary Fund — cr18315-colombiarosc - Section 2*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18315-colombiarosc.pdf_