PUERTO RICO Law and Practice Contributed by: Fernando J. Rovira-Rullán and Andrés I. Ferriol-Alonso, Ferraiuoli LLC
5.3 Incorporation and Registration In addition to annual reports as discussed in 5.1 Financial Reporting Requirements , corporations and LLCs have to register the following with the Puerto Rico Department of State: • the certificate of incorporation or organisation; and • amendments, mergers, consolidations and dissolu - tions. Additionally, corporations and LLCs are now obligated to file their existence or dissolution with the Registry of Legal Entities. Such filings, including annual reports, are publicly available. Failure to make such filings would result in such acts being regarded as having not taken place. Not pre - senting the annual reports or not paying annual dues may result in the cancellation of the entity. 5.4 Global Anti-Money Laundering Puerto Rico does not have a standalone anti‑money laundering regime of general application. Accordingly, AML reporting obligations applicable to companies operating in Puerto Rico are driven primarily by United States federal law, particularly where an entity quali - fies as a regulated financial institution or otherwise falls within the scope of the US Bank Secrecy Act and related regulations. These institutions must maintain robust anti-money laundering programs that include internal controls, independent testing, designated compliance officers, and ongoing personnel training. They must also implement risk-based customer due diligence procedures, including identifying and verify - ing the beneficial owners of legal entity customers. Reporting obligations require the filing of currency transaction reports with FinCEN, a bureau of the US Department of the Treasury, under the Bank Secrecy Act. Financial institutions must also file suspicious activity reports when they detect transactions that may involve money laundering or other illicit activity. Additionally, monetary service businesses in Puerto Rico must implement AML compliance programs con - sistent with the Bank Secrecy Act and the USA Patriot Act, including staff supervision and training, filing of suspicious activity reports, and maintaining detailed records of all monetary transactions.
Boards of directors of financial institutions bear direct responsibility for approving and overseeing the imple - mentation of their institution’s AML programmes. Directors must ensure that these programs comply with applicable federal regulations and local statutes, including those administered by the Office of the Com - missioner of Financial Institutions of Puerto Rico. This oversight duty encompasses ensuring that the institu - tion’s AML policies are adequate to detect and report suspicious activities, as well as to maintain accurate records of customer information and transactions. As with other regulatory and compliance risks, board oversight is addressed through directors’ general fidu - ciary duties of care and loyalty under the Puerto Rico General Corporations Act, informed by US federal regulatory expectations and by Delaware case law principles that are highly persuasive in Puerto Rico. Directors are not subject to automatic personal liabil - ity for AML non‑compliance solely by virtue of their position. However, liability may arise where a director or officer knowingly participates in, authorises, or dis - regards AML violations, or where a sustained failure of oversight rises to the level of gross negligence or bad faith. As with other areas of enterprise risk, docu - mented oversight and reasonable reliance on qualified officers and advisers are central to mitigating potential director exposure. 6. Audit, Risk and Internal Controls 6.1 External Auditors Under the Corporations Act, corporations with an annual business volume in excess of USD3 million are required to file with the Puerto Rico Department of State an audited balance sheet, together with their annual report. LLCs are not required to file financial reports with the Puerto Rico Department of State. 6.2 Risk Management and Internal Controls Under Delaware case law, which, as previously indi - cated, is highly persuasive in Puerto Rico, directors have certain requirements and responsibilities regard - ing risk management and internal controls. While Delaware courts generally afford directors con - siderable discretion in managing the affairs of the
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