• By Daniel ORGUÉ
• 16-03-2018

Foundations and Associations and Law on the Prevention of Money Laundering in Spain

The Foundations and Non-profit associations are entities with juridical personality and are considered to be subjects forced by the Law of Prevention of the Money laundering and Financing of the Terrorism.

Nowadays many persons or companies decide to constitute Foundations or Non-profit associations with the aim to realise a few concrete ends in altars to the general interest: school centres, sporting bodies, Non-governmental Organizations, or corporate foundations that are in use for canalizing the shares of a company.

The reasons that can lead these persons to undertaking this type of associations are different but usually they end up being always the same ones: a fiscal attractive regime, major flexibility, to create alliances, to generate synergies or to give form to the social commitment of a company.

Now then, this simplification or simplicity in their forms does not mean that they are exempt from obligations of legal nature since they can be topics of so much importance as it is the Prevention of the Money laundering and Financing of the Terrorism or the Organic Law of Protection of Information, or that they have the obligation to implement effective mechanisms to anticipate the commission of administrative, legal infractions or crimes inside the own organization.

Among other obligations, and in relation to the Prevention of Money laundering, the article 39 of the Law 10/2010 states that Foundations and Associations will have to fulfil, among other aspects, with the following:

- The obligation to identify all persons who contribute or receive free funds or resources of the Foundation, under the terms of articles 3 and 4 of the Law; that is, complying with the obligation of formal identification and identification of the real owner.

- The obligation to keep the records and supporting documentation of the identification referred to in the previous paragraph, for 10 years.

- Put those records and documentation at the disposal of the Protectorate and of the different administrative and / or judicial bodies with powers in the field of prevention or prosecution of money laundering or financing of terrorism.

In this sense, we have all been front-row viewers of how in recent years both foundations and non-profit associations have been and still are in the spotlight of inspectors and prosecutors for the irregularities that have been committed in relation, above all , to tax evasion, money laundering or bribery. And there have been few covers that have been news of this type in the most important newspapers of our country.

Therefore, it is absolutely necessary that this type of associations or foundations comply scrupulously with all their obligations and legal preventions in order to avoid and accredit maximum diligence to achieve the goal of general interest of the association, implementing the culture of ethics and social responsibility based on essential principles such as transparency and sustainability.

In this regard, not only is it necessary to comply with the legal obligations related to the Prevention of Money Laundering and Financing of Terrorism or the one related to Data Protection, but we also consider it advisable to implement a Legal Compliance program (see more info here) to ensure scrupulous compliance with legality throughout the organization.

Otherwise, that is, if the legal obligations are not met, or do not follow the recommendation to implement a Protocol of Legal Compliance that can be effective to prevent the commission of crimes within the organization, apart from very important sanctions and fines of an administrative nature, can be involved in a criminal procedure in Spain with such dire consequences as can be the closing of the Foundation or Association.

Therefore, our advice is that whether your intention is to establish an association or foundation of this type, or if you already have one and have doubts about compliance with these preventive obligations, consult an expert professional about it.

Do you need our lawyers to advise your foundation or association to set up or comply with the obligations of Prevention of Money Laundering? Contact our office and request an in-person visit with our expert lawyers in commercial law or use any of the legal services offered by our website.