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In 1993, 27 years ago, the first law on the prevention of money laundering was enacted (Law 19/1993, of December 28). It provided for the establishment of the Commission for the Prevention of Money Laundering and its supporting bodies: the Secretariat and Executive Service, i.e., the Sepblac. The latter would assume in Spain, the functions of a Financial Intelligence Unit (FIU), and of supervision of the obligations imposed by referred law to the obliged entities. This body took advantage, in its early days, of the ‘Servicio Ejecutivo de Vigilancia de las Infracciones al Control de Cambios’ (Executive Service for Surveillance of Exchange Control Infringements) (SVICC) structure, a unit ascribed to the Bank of Spain, in charge of the function of detecting transactions which breached exchange control rules. Members of the National Police Force, Treasury officials and staff of the Bank of Spain, formed part of this body.

Thus, the FIU came into existence in this country, very closely linked to the Bank of Spain. Since its inception, only for the period, 2013-2020, did the Bank of Spain, not assume the management of this body.

Functions of the FIU

The function of the Financial Intelligence Unit is the reception and analysis of transactions suspicious of being related to money laundering or terrorist financing sent by the obliged entities. The most recent legislative amendments have also assigned the FIU, the function of strategic analysis, which aim is to identify trends and threats related to money laundering and terrorist financing. The Sepblac uses the experience and the information available within this body, to determine whether those notified risk factors, constitute reasonable signs for the reported transactions, to be related to these offenses. The intelligence reports that are issued, are then sent to the relevant judiciary, police or administrative authorities in charge of combatting the money laundering and terrorist financing offences, which, for the appropriate cases, will lead to the relevant investigations or the appropriate judiciary proceedings. In other words, Sepblac, as an FIU, carries out the function of supporting the judiciary and police authorities in the investigation and prosecution of offenders.

As a part of the supervising function, the Sepblac assesses whether the obliged entities have effective internal control procedures to prevent their activity being used as means of concealment of illegally obtained funds or to finance terrorist activities.

At European level, the Financial Intelligence Unit usually carries out the analysis function, and the function of evaluating whether the procedures to be implemented by obliged entities for anti-money laundering and terrorist financing purposes, are performed through the activity of sectoral supervising bodies and even professional associations: central banks, securities markets and insurance authorities, etc.

In Spain, Sepblac assumes FIU and supervision functions

Our legislation assigns both functions, those of a Financial Intelligence Unit and the relevant supervising functions, to the same body: the Sepblac. This overlap, which is not common, but not unique within Europe –also occurring in the case of Malta-, has been subject of debate.

Should there be a separation of functions?

There is no unanimous view regarding the appropriateness of sharing the information received between two departments of the Sepblac, which activity is not governed by the same objectives. In carrying out the analysis function (FIU), it involves detecting when the received suspicious transactions are confirmed and intelligence reports must be issued to be sent out, whereas, in the case of the supervising function, it is a question of raising the appropriate control standards implemented by the obliged entities and thereby improving the effectiveness of the prevention system as a whole. In other words, in one case information is sought to prosecute the offense and the offender and in the other, it involves improving the control systems of the obliged entities. Two different objectives but ultimately aimed at combatting offenses which, by attacking the foundations of society, provide substantial gains.

Those in favor of the separation of functions also question to what extent the interests of both functions could be confused, leading to punitive consequences due to the breach of certain obligations in the communication of suspicious transactions, in the course of which the entity may have failed to apply some of the mandatory procedural measures.

On the other hand, others consider that the supervising function is enriched by the assessment of content and timeliness in the analyses of suspicious transactions performed by the analysis department of the Sepblac.

The specific function of analysis and management of particularly valuable and sensitive financial information, leads to the requirement of this body to be subject to extreme protection, both, of its own activity, and of the information handled by its professionals, thus ensuring the essential independence with which it must conduct its function of analysis and transmission of information to the State Security Forces. Neither in Spain, nor in any other neighboring country, is there an administrative body independent from the financial intelligence units, with authority to receive, access and manage such abundant and sensitive information, nor do these include professional groups from such diverse bodies as: national police, Guardia Civil, officials of the tax authority, customs, Bank of Spain, Directorate of Insurance or National Securities Market Commission. Having that level of experience is decisive in the proper performance of the functions entrusted by legislation to Sepblac.

Change in the management

In this context, on October 30, the change in the management of the Sepblac was formalized, having the  previous manager since 2013, Juan Manuel Vega, replaced by the former Deputy Director of the General Directorate of Supervision of the Bank of Spain, Pedro Comín[i], a body which, citing the basic legislation on prevention (Law 10/2010, of April 28, on prevention of money laundering and the financing of terrorism):

“… is a body under the control, institutionally and functionally, of the Commission for the Prevention of Money Laundering and Monetary Infringements, which, through its Permanent Committee, will guide its activity on a permanent basis and shall approve its operating guidelines.

The powers relating to the economic, budgetary and contractual rules of the Executive Service of the Commission shall be exercised by the Bank of Spain in accordance with its specific legislation, the appropriate agreement being signed, for these purposes, with the Commission for the Prevention of Money Laundering and Monetary Infringements.

The employees of the Bank of Spain posted to the Executive Service of the Commission shall maintain their employment relationship with the Bank of Spain, shall report to to the Executive Service, and shall be subject to the staff regulations of the Bank of Spain.

The budget of the Executive Department, after its approval by the Commission for the Prevention of Money Laundering and Monetary Infringements, shall be included, duly separated, in the proposed budget of operating expenses and investments referred to in Article 4.2 of Law 13/1994, of June 1, on the Autonomy of the Bank of Spain. Any expenses which must be incurred from the above-mentioned budget shall be paid by the Bank of Spain which shall be compensated for them in the manner indicated in section 5 of this article [ii]”.

[i] Inspector of the Bank of Spain since 1991, Executive Director of FROB (Fund for Orderly Bank Restructuring) from 2012 to 2014 and assistant director general of Supervision of the Bank of Spain from 2014 to 2017. Director of the AIReF (Independent Authority for Fiscal Responsibility) from 2017 to 2019.

[ii] The Bank of Spain will send to the Directorate General of the Treasury and Financial Policy. The above-mentioned Directorate, once it has checked that account, will pay it to the Bank of Spain from the nonbudgetary item which is created for these purposes by the Central Public Accounts Office.