The Financial Action Task Force — FATF — is the international body responsible for setting standards to prevent money laundering and terrorist financing. As part of its work, the FATF has developed a set of 40 Recommendations, which form the foundation of control and supervision systems in this field.
FATF Recommendation 11 establishes the need for financial institutions to maintain records of transactions and information obtained through customer due diligence measures. This standard must be incorporated into each country’s internal regulations to ensure mandatory compliance in all States.
Regarding the information contained in transaction records, it must be sufficient to allow for the reconstruction of individual transactions, ensuring that the stored information can be used as evidence in criminal proceedings. As for the information obtained during due diligence processes, institutions must store customer identification documents, such as identity documents, as well as preliminary analyses reflecting the purpose and nature of the business relationship.
Recommendation 11 highlights the need to retain this information for a minimum period of five years. Each State is responsible for deciding whether to maintain or extend this time limit. For example, Spain’s Article 25 of Law 10/2010 on the prevention of money laundering and terrorist financing sets a 10-year limit. In contrast, Uruguay, in Decree No. 379/018 regulating the country’s prevention law, establishes a five-year period.
The primary purpose of this measure is to ensure that competent authorities can access information in a timely and efficient manner, enabling the reconstruction of individual transactions and providing evidence if required for investigations or legal proceedings.
Countries such as Ecuador, Algeria, and Vietnam are non-compliant with this Recommendation. In the case of Ecuador, its latest report indicates that regulations do not require the retention of “records of transactions below the threshold of USD 10,000 and USD 5,000.” A similar issue is observed in Vietnam, where the thresholds triggering the need to maintain transaction records are unusually high. In Algeria’s case, its mutual evaluation report highlights the lack of a mandatory requirement to retain records of information obtained through due diligence measures.
Are you interested in learning more about the 40 FATF Recommendations? Discover our series of articles where we explain each of them and their significance.
- Recommendation 1: Risk assessment and application of a risk-based approach.
- Recommendation 2: National cooperation and coordination.
- Recommendation 3: Money laundering offense.
- Recommendation 4: Confiscation and provisional measures.
- Recommendation 5: Terrorist financing offense.
- Recommendation 6: Targeted financial sanctions related to terrorism and terrorist financing.
- Recommendation 7: Targeted financial sanctions related to the proliferation of weapons of mass destruction.
- Recommendation 8: Non-profit organizations.
- Recommendation 9: Banking secrecy.
- Recommendation 10: Customer due diligence.
- Recommendation 11: Record-keeping.
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