Comparative Analysis: Due Diligence Guide UAF 2026 vs. 2020 Version

Executive Summary

The Financial Analysis Unit (UAF) of the Dominican Republic published in 2026 a significant update to its Due Diligence Guide, replacing the original 2020 version. This new guide represents a substantial evolution in the approach and depth of due diligence treatment for obligated subjects under the AML/CFT/CPF system (Prevention of Money Laundering, Terrorist Financing, and Proliferation of Weapons of Mass Destruction).

1. Changes in Structure and Scope

1.1 2020 Guide: Original Structure

The original guide was an introductory document of approximately 23 pages with the following structure:

Characteristics:

• Merely guidance and educational in nature
• No binding effect
• First approach to the subject
• Aimed at new obligated subjects

1.2 2026 Guide: New Structure

The new guide presents a much more robust and technical structure:

2. New Concepts and Aspects Introduced

2.1 Guiding Principles of Due Diligence (Section 4.1)

The 2026 Guide establishes for the first time nine guiding principles that should guide the entire process:

1. Risk-Based Approach (RBA): DD must be applied according to risk level
2. Proportionality: Measures proportional to risk exposure
3. Reasonableness: Reasonable criteria in obtaining and verification
4. Sufficiency and Verifiability: Sufficient and verifiable information
5. Continuous Update: Dynamic process, not a one-time act
6. Documentation and Traceability: Everything must be documented
7. Institutional Coherence and Shared Responsibility: Cross-cutting effort
8. Technical Independence of the Process: Free from commercial pressures
9. Confidentiality and Data Protection: Strict information handling

Impact: These principles provide a solid conceptual framework that did not exist in the 2020 version, allowing obligated subjects to design their procedures with technical foundation.

2.2 Due Diligence Methodology (Section 5)

Risk Management Cycle

The 2026 Guide introduces a structured methodology in four phases:

Phase 1 - Identification: Collect data, gather information about product/service, identify BO, obtain info about source of funds.

Phase 2 - Measurement: BO verification, source of funds/wealth evaluation, risk factor analysis, transactional profile construction, risk level assignment.

Phase 3 - Control: Documentary requirements, operational limits, additional validations, acceptance/rejection decisions.

Phase 4 - Monitoring: Systematic review, evaluation update, alert activation, documentation.

2.3 Beneficial Owner Identification and Verification (Section 5.4)

The 2026 Guide extensively develops the treatment of Beneficial Owner (BO), an aspect barely mentioned in 2020:

Expanded Definition

A BO is considered to be someone who:

1. Owns 20% or more of share capital or voting rights (direct or indirect)
2. Exercises effective control through other means (without sufficient ownership)
3. Benefits economically or legally from the transaction

Identification Methodology

1. By Ownership: Evaluate corporate structure for 20% or more
2. By Control: Board composition, contractual control, special rights, significant influence
3. Complex Structures: Holdings, funds, trusts

New Specific Structures Covered

• Multi-layered companies
• Trusts
• Foundations and associations
• Investment funds
• Foreign entities

Important novelty for the Dominican context: Natural persons related by marriage, blood, or affinity up to the second degree who, together, meet the 20% threshold or exercise effective control are recognized as BOs.

2.4 Source of Funds vs. Source of Wealth (Section 5.7)

The 2026 Guide establishes a fundamental technical distinction that did not exist in 2020:

2.5 Types of Due Diligence According to Risk (Section 6)

The 2026 Guide details the three levels with greater precision:

Simplified Due Diligence (SDD)

• Applies to: Clients classified as low risk
• Characteristics: Minimum information, extended deadlines
• Prohibition: Does NOT apply if there is suspicion of ML/TF/PF
• 2026 Novelty: Expressly linked to financial inclusion

"SDD allows adjusting the intensity of controls to the client's actual exposure, maintaining system integrity and facilitating access to basic products."

Standard Due Diligence (CDD)

• Applies to: Medium risk clients
• Requirements: Identification, BO verification, purpose of relationship, documentation, risk assessment

Enhanced Due Diligence (EDD)

• Applies to: High risk clients
• Scenarios: PEP, third parties/trusts, high-risk jurisdictions, non-face-to-face relationship, companies with bearer shares, complex structures
• 2026 Novelty: Extension to branches, affiliates, subsidiaries abroad, critical suppliers

2.6 Treatment of Politically Exposed Persons (PEPs) - Section 6.1.3.1

The 2026 Guide extensively develops the treatment of PEPs:

Complete List of PEP Positions

The list from article 19 of Decree 408-17 with 35 specific categories is reproduced.

Extension to Family Members and Associates

• Spouse or partner in common-law union
• Relatives by blood or affinity up to the second degree
• Close associates (economic, corporate, functional)

Policy Against Indiscriminate De-Risking

New guidance: "The enhanced treatment of PEPs should not become automatic exclusion."

Recommendations:

• Avoid closure practices based solely on PEP status
• Apply objective criteria
• Document residual risk analysis
• Implement reasonable mitigants
• Ensure orderly termination only when risk is unacceptable

Cooling-Off Period

• Duration: 3 years after leaving office
• After: Maintain monitoring, verify source of funds, more frequent reviews

2.7 Ongoing Due Diligence (Section 7)

The 2026 Guide introduces a complete chapter on ongoing DD:

Periodic Update

• Frequency according to risk level
• For inactive clients: verifiable annotation in file
• High risk: minimum annual review

Continuous Monitoring

Differentiated applicability:

2.8 Distinction Between Due Diligence and "Know Your Customer" (Section 5.8.7)

Important clarification: The 2026 Guide establishes that KYC (Know Your Customer) is not the same as Due Diligence.

2.9 Elements That Do NOT Constitute Due Diligence (Section 11)

New section identifying incorrect practices:

1. Requesting documentation without substantive analysis
2. Requesting regulatory documents that do not apply to the client type
3. Conducting DD on third parties not directly linked
4. Applying automated processes without human validation when risk requires it
5. Treating the process as mere documentary compliance

2.10 Practical Cases by Sector (Section 12)

The 2026 Guide includes illustrative practical cases from multiple sectors:

• Fiduciary Sector: Hidden beneficiaries, front men, PEPs
• Banking Sector: Offshore structures, fraud, pyramid schemes, financial inclusion, digital onboarding
• Exchange Sector: Real estate transactions, sub-agents
• Securities Market Sector: PEP validation, investment funds

3. Detailed Comparison: 2020 vs. 2026

4. Operational Implications

4.1 For All Obligated Subjects

1. Review and update the Compliance Program to incorporate:
   • The nine guiding principles
   • The four-phase methodology
   • The differentiated DD criteria
2. Update Beneficial Owner policies to include:
   • Control by kinship criterion
   • Treatment of complex structures
   • Residual approach (senior administrator)
3. Distinguish source of funds vs. source of wealth in procedures
4. Implement anti-de-risking policy for PEPs
5. Establish continuous monitoring parameters differentiated by type of relationship

4.2 Required Documentation

The 2026 Guide establishes detailed retention requirements for 10 years:

• Identification information
• Documentation of applied DD
• Transaction records
• Communications and reports
• Internal justifications and approvals

5. Conclusions

The 2026 Due Diligence Guide represents a significant advancement over the 2020 version, transforming from an introductory document to a comprehensive technical tool. The main contributions are:

1. Sectoral harmonization: Unified criteria to reduce interpretive asymmetries
2. Operability: Clear and applicable methodology
3. Proportionality: Emphasis on risk-based approach
4. Inclusion: Linking SDD with financial inclusion
5. Regulatory update: Alignment with FATF 2025
6. Pedagogy: Practical cases to facilitate understanding

Obligated subjects must conduct a comprehensive review of their procedures to align with the new standards established in this guide.

Document prepared for internal analysis. February 2026.