Payment institutions
Real-time transactions
“When a transaction executes in seconds, refraining has to be automated, or it simply does not exist.”
AML Duty to Refrain from Executing Transactions in Spain
The duty to refrain under Article 19 of Law 10/2010 requires you not to execute a suspicious transaction before reporting it. It is a separate obligation from the duty to report, it has its own exceptions, and it is one of the obligations that most often lands entities in sanction proceedings.
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- Duty to refrain provision
- Art. 19
- Suspicious transaction reporting
- Art. 18
- Governing law
- Law 10/2010
Services
What we do for you on the duty to refrain
Refraining plays out in minutes, with the customer waiting. That is why the workflow has to be in writing beforehand.
Procedure
Duty-to-refrain workflow in the manual
We draft the procedure that sets out who can stop a transaction, within what time frame, on what supporting evidence, and how the decision to execute despite the indication is documented when an exception applies.
Learn more →
Art. 19EscalationTime limits
Reporting
Link with suspicious transaction reporting
Refraining and reporting under Article 18 are separate obligations that are triggered almost at the same time. We define the sequence, the internal time limits and who handles each step, so that neither is left without an owner.
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Art. 18SEPBLACSequence
OCI
The OCI’s decision-making power
Who has real authority to stop a transaction and how the minutes are recorded.
Learn more →
OCIMinutes
ANIFI
Where refraining ends and administrative freezing begins
What changes when the order not to execute comes from the authority rather than from you.
Learn more →
ANIFIFreezing
Defense
Defense in sanction proceedings
If you have already received a request for information for executing a transaction that should have been stopped.
Learn more →
PenaltyDefense
Audit
Review of executed transactions
Sampling of closed alerts to detect cases where the entity should have refrained.
Learn more →
SamplingAlerts
Concept
What the duty to refrain is
Do not execute the suspicious transaction until it has been reported. An obligation in its own right, not an add-on.
The duty to refrain is set out in Article 19 of Law 10/2010 and says something very specific: obliged entities shall refrain from executing any transaction where there is an indication or certainty that it is related to money laundering or terrorist financing. First you report, then you execute (if appropriate), not the other way around.
It is a standalone obligation. Many people treat it as an appendix to the reporting duty under Article 18, and it is not: they are two separate duties arising from the same facts. You can comply with the reporting duty and still have breached the duty to refrain, and that is exactly what ends up being argued in sanction proceedings.
And it is an uncomfortable obligation to carry out, because it arrives with the customer on the other end of the line asking why their transfer has not gone through. That is why the only way to comply properly is to have it settled in writing before it happens: who decides, how quickly, on what basis and what the customer is told.
Exceptions
The two exceptions in Article 19
The law allows execution in two specific cases, and in both it requires reporting immediately afterwards.
| Case | What it allows | What it requires in return | Practical risk |
|---|---|---|---|
| Refraining is materially impossible | Executing the transaction despite the indication | Reporting to SEPBLAC immediately afterwards, explaining the reason | It is invoked far too lightly. “The system had already processed it” only works if you can prove it with a log. |
| Risk of hindering the investigation | Executing so as not to alert the person under investigation | Reporting immediately afterwards and documented justification of the decision | This is the most delicate exception: if there is no record of the reasoning, it reads as a plain execution. |
| Express order from the authority | Executing or not executing, as instructed | Following the instruction received to the letter and keeping it on file | Strictly speaking it is not an exception but an external instruction, yet it is often mistaken for one. |
The Article 19 exceptions are not a way out: reversing the general rule requires documenting why refraining was not possible. The lack of that justification is what turns a legitimate exception into a breach.
Comparison
Refraining, reporting and freezing: what sets them apart
Three mechanisms that are triggered almost at once and that a poorly drafted procedure ends up mixing up.
| Element | Duty to refrain (Art. 19) | Suspicious transaction reporting (Art. 18) | Administrative freezing |
|---|---|---|---|
| Who decides | The obliged entity | The obliged entity | The authority (SEPBLAC, the future ANIFI, a court) |
| What is done | The transaction is not executed | The indication is reported | Funds or accounts are frozen |
| Timing | Before execution | As soon as there is an indication | When the authority orders it |
| Nature | Obligation in its own right | Obligation in its own right | Act of authority |
| Can an exception apply? | Yes, in two specific cases | No | Not by the obliged entity |
| Effect on the customer | The transaction is not processed | None visible | Funds become unavailable |
| Tipping-off prohibition | Yes | Yes | As instructed |
Confusing the three is the most common cause of operational errors. Refraining is your decision; freezing is not. And the tipping-off prohibition applies in all three cases.
Sectors
Where the duty to refrain breaks down in each sector
The duty is the same; the point of failure changes depending on how the transaction enters your system.
Banking and lending
The transfer that has already gone out
“The material impossibility exception only holds up if the system log proves the exact moment the transaction was processed.”
Notaries and law firms
The deed about to be signed
“Here refraining means not authorizing the deed, and the time pressure is measured in minutes, not days.”
Crypto
The withdrawal to an external wallet
“Once the on-chain transfer has been executed it cannot be reversed: refraining is the last real barrier.”
Consequences
What happens if you execute the transaction anyway
The duty to refrain is one of the few obligations you can breach with a single click without even noticing.
Executing a transaction where there was an indication is a breach in its own right, even if it is then reported correctly. It is penalized on its own.
Invoking the exception without justifying it turns a defensible decision into an infringement. The exception exists; what does not exist is an exception without written support.
No workflow means no refraining. If nobody has express authority to stop a transaction, in practice no transaction is ever stopped.
| Severity | Amount | Basis or alternative |
|---|---|---|
| Minor infringements | up to €60,000 | Less significant breaches, or breaches with no appreciable impact on the AML/CFT system. |
| Serious infringements | €60,000 – €5,000,000 | Or 10% of the company’s total resources. |
| Very serious infringements | €150,000 – €10,000,000 | Or 10% of the entity’s own funds. |
Who can stop a transaction at your entity right now?
If the answer is not a name and a written procedure, the duty to refrain has not been implemented. We set it up with you and document it in the manual.
Frequently asked questions
Duty to refrain from executing transactions: common questions
What exactly is the duty to refrain?
The obligation, set out in Article 19 of Law 10/2010, not to execute a transaction where there is an indication or certainty that it is related to money laundering or terrorist financing until it has been reported to SEPBLAC. It is a standalone obligation, separate from the duty to report.
Can I execute the transaction and report it afterwards?
Only in two cases: when refraining is not materially possible or when it could hinder the investigation of the matter. In both cases the report must be made immediately afterwards, and you must keep a written record of why the exception was invoked. Without that record, the exception does not exist for practical purposes.
Who within the entity decides to refrain?
Whatever your manual says. Usually the internal control body (OCI) or the SEPBLAC representative, with an urgent escalation route for transactions that cannot wait. What matters is that there is an identified person responsible who can be reached, because the decision is taken in minutes.
What do I tell the customer if I stop their transaction?
Nothing about the real reason. Article 24 of Law 10/2010 prohibits disclosing to the customer or to third parties that information has been or will be reported to SEPBLAC. We cover this in detail on our page on the tipping-off prohibition. The customer service script must be drafted in advance, not improvised.
Is refraining the same as an account freeze?
No. Refraining is your decision on a specific transaction. A freeze is an act of authority that affects funds or accounts; today it falls to SEPBLAC or the courts, and the draft bill (anteproyecto) gives broader freezing powers to the future ANIFI.
How long can I keep the transaction on hold?
The law ties refraining to reporting, not to a fixed period of indefinite retention. In practice the transaction stays on hold until it is reported and, where applicable, until the authority indicates how to proceed. That is why your internal procedure should set its own maximum decision time, usually a matter of hours.
Does it apply to all obliged entities?
Yes. The duty to refrain applies to all obliged entities under Law 10/2010, financial and non-financial. What changes is how it is put into practice: for a payment institution it means not processing the order; for a notary, not authorizing the deed; for a real estate agency, not completing the transaction.
What evidence will I be asked for in an inspection?
Three things: the record of the alert that gave rise to the indication, the record of the decision to refrain (or of the exception invoked) with the person responsible and the time, and the report submitted. If any of the three is missing, the chain breaks.
Does anything change with the EU regulation?
Regulation (EU) 2024/1624 (AMLR), applicable from July 2027, keeps and harmonizes the duty to refrain under the same scheme: do not execute unless it is impossible or there is a risk to the investigation, and report immediately afterwards. What matters for Spanish entities is that it will become directly applicable law. More detail on our AMLR page.
What if the transaction has already been executed by mistake?
You still report it and document the incident: what failed, when it was detected and what corrective measure has been taken. A mistaken execution that is reported and corrected is an incident; a mistaken execution that is kept quiet is an infringement.
Practical guide
A practical guide to the duty to refrain
The duty to refrain is not solved with a paragraph in the manual: it is solved with a workflow that works at six o’clock on a Friday evening. Ten steps to get it in place.
Someone has to be able to stop it
Name the person who can stop a transaction and the person who stands in for them. Without a defined deputy, the workflow collapses at the first absence.
Your own internal time limit
The law does not give you a stopwatch, but your procedure must. Set a maximum number of hours to decide and another to report.
What the customer is told
Drafted in advance and approved. Improvising in front of the customer is the fastest way to breach the tipping-off prohibition.
Duty to refrain checklist in 10 steps
- Set out in the manual who has the power to refrain and who stands in for them when they are absent.
- Set a maximum internal time limit, in hours, for deciding whether to refrain.
- Establish the urgent escalation channel from the front-line analyst to the decision-maker.
- Create the log of refraining decisions, with time, person responsible, reason and outcome.
- Draft the procedure for invoking the Article 19 exceptions and require written justification.
- Prepare the customer communication script, which reveals neither the indication nor the report.
- Connect the refraining workflow with the suspicious transaction reporting workflow, so that one is never triggered without the other.
- Configure the system so that flagged transactions are held and are not processed by default.
- Provide specific training to front-office and operations teams, who are the ones facing pressure from customers.
- Include a sample of alerts closed without refraining in the annual audit to check the judgment applied.
If you want to review the whole workflow, start with the AML manual or an AML/CFT audit.
The duty to refrain in operation
From “this looks odd” to a transaction held and documented
The duty to refrain plays out in a very short window of time. These are the four stages where compliance is won or lost.
1) DetectionThe indication appears
It may come from a monitoring rule, from an analyst’s judgment or from an awkward question from the customer. The source does not matter; what matters is that it is recorded.
- Time-stamped alert
- Identified analyst
- Reason for the indication
2) HoldThe transaction is stopped
Actually stopped. Noting that it should be stopped is not enough: the system has to prevent it from being processed while the decision is pending.
- Technical block
- Case status
- No execution by default
3) DecisionRefrain or invoke an exception
With a name and a time. If one of the two Article 19 exceptions is invoked, the justification is written at that moment, not afterwards.
- Person responsible
- Reason
- Justified exception
4) ReportingAnd then you report
Refraining without reporting is only half the obligation met. The workflow must ensure that one automatically triggers the other.
Tip: link the two logs. If a case is marked as refrained and has no associated report after X hours, trigger an internal alert.
Quick decisionPractical map: stop or execute?
Three typical situations and the right response to each.
Clear indication
Refrain immediately, report and record. Without consulting the customer.
Already executed
Material impossibility exception: report immediately and document the log.
Investigation under way
Assess the hindrance exception, keep a record and report.
Duty-to-refrain playbook
The duty to refrain in practice
Power to refrain
A designated person with real power to stop transactions, and a deputy.
Appointment in the manual and OCI minutes.
Effective hold
The flagged transaction is not processed while the decision is pending.
Case status in the system and non-execution log.
Documented decision
A record of who decided, when and for what reason.
Time-stamped log of refraining decisions.
Exceptions
Written justification when the transaction is executed despite the indication.
A reasoned note and a technical log proving impossibility.
Link with reporting
Every refraining decision generates an associated report.
Traceability between the refraining log and SEPBLAC’s acknowledgment of receipt.
Signs that your duty-to-refrain workflow is not working
Any one of these is enough to mean the duty is not being met in practice.
- There is no person with express power to stop a transaction.
- The system allows transactions flagged as suspicious to be processed.
- The refraining log is empty even though reports have been filed.
- The Article 19 exceptions are invoked without a reasoned note.
- Front-office staff do not know what to say when a transaction is held.
Working glossary
Key concepts of the duty to refrain
Terms that come up in manuals, requests for information and sanction proceedings.
Art. 19Basis
Duty to refrain
Not executing a transaction showing an indication of money laundering or terrorist financing until it has been reported.
Law 10/2010, Article 19.
Art. 18Linked
Suspicious transaction reporting
The obligation to report to SEPBLAC any transaction showing an indication. Separate but simultaneous.
IndicationThreshold
Reasonable suspicion
It does not require certainty or proof: it is enough that the known facts give grounds for reasonable suspicion.
A lower threshold than in criminal law.
ImpossibilityException
Refraining is materially impossible
First exception in Article 19. It requires technical proof, not a mere assertion.
Must be backed by logs.
HindranceException
Risk to the investigation
Second exception. The transaction is executed so as not to alert the person under investigation, and is reported immediately.
Requires a reasoned note.
Tipping offProhibition
Disclosure to the customer
It is prohibited to warn the customer that a report has been or will be made.
FreezingAuthority
Freezing of funds
An act of the authority, not of the obliged entity. Not to be confused with refraining.
See: account freezing.
OCIGovernance
Internal control body
Usually the body with the power to decide on refraining and the one that documents it.
See: OCI.
AMLR2027
Regulation (EU) 2024/1624
Keeps the duty to refrain under the same scheme and makes it directly applicable law.
Applicable from July 10, 2027.
COMPLIANCE CONTROL CENTER · DUTY TO REFRAIN
Decision matrix: should the transaction be executed?
Cross the strength of the indication with the technical status of the transaction. The cell tells you what to do and what you will need to be able to prove afterwards.
Duty-to-refrain matrix
Green: a simple decision. Red: a decision that requires additional documentation.
Indication \ Status
Pending
In progress
Already executed
Weak indication
Analyzewithout stopping
Analyzemonitor
Recordno report
Clear indication
Refrainand report
Refrainif possible
Reportexception
Certainty
Refrainmandatory
Refrainmandatory
Report+ reasoned note
Obliged entities
Who does the duty to refrain apply to?
To all obliged entities under Law 10/2010. What changes is the act that has to be stopped.
General
Obliged entities under Law 10/2010
We analyze whether your business qualifies as an obliged entity and how the duty to refrain works in your specific operations.
See obliged entities →
Law 10/2010Art. 19
Fintech
Payment institutions and fintechs
When a transaction executes in seconds, refraining has to be automated within the payment engine itself.
See our fintech approach →
Real timeHold
Law firms
Lawyers and advisory firms
Refraining means not completing the transaction or not continuing the engagement, with the legal advice exemption as a nuance.
See AML for law firms →
EngagementExemption
Crypto
Crypto-asset service providers
An on-chain transfer cannot be reversed. Here refraining is literally the last barrier available.
See crypto AML →
On-chainIrreversible
Common mistakes
The six failures we see most often with the duty to refrain
All of them come up regularly in external expert reports and in supervisors’ requests for information.
Treating it as part of reporting
They are two separate obligations. You can report impeccably and still have breached the duty to refrain, and that is penalized separately.
Not designating anyone with the power to stop
If the decision requires convening the OCI and the OCI meets monthly, refraining does not exist as an operational mechanism.
Invoking material impossibility without proving it
“It had already gone through” is an assertion. The system log with its time stamp is proof. Only the second one counts.
Letting the system process flagged transactions
The hold has to be technical. An alert that does not prevent execution is documentation, not a control.
Improvising the explanation to the customer
The script has to be in writing and approved. Improvising in front of an insistent customer is the shortcut to breaching Article 24.
Not recording the refraining decisions that do happen
An empty log alongside filed reports raises the obvious question: did the entity ever refrain, or did it only report after executing?
Official sources
Where all of the above comes from
Direct links to the consolidated texts and to the competent bodies.
BOE
Law 10/2010 of April 28
Consolidated text. Article 18 (suspicious transaction reporting) and Article 19 (duty to refrain from executing transactions).
BOERoyal Decree 304/2014 of May 5
Implementing regulations of Law 10/2010.
EUR-LexRegulation (EU) 2024/1624 (AMLR)
Keeps the duty to refrain as directly applicable EU law from July 2027.
SEPBLACExecutive Service of the Commission for the Prevention of Money Laundering
Spain’s financial intelligence unit and the recipient of the reports.
TreasuryCommission for the Prevention of Money Laundering
Institutional information and penalty regime.
FATFFinancial Action Task Force
International recommendations on reporting and suspending transactions.
Initial publication, including the treatment of the duty to refrain under the AMLR.
Planned review: application of Regulation (EU) 2024/1624.
Contact
Book a call
Tell us how your entity currently decides whether a suspicious transaction goes ahead or is stopped.
Legal framework of the duty to refrain from executing transactions in Spain
The duty to refrain from executing transactions is set out in Article 19 of Law 10/2010 of April 28 on the prevention of money laundering and terrorist financing. It requires obliged entities not to execute transactions where there is an indication or certainty that they are related to money laundering or terrorist financing, before making the report provided for in Article 18.
A standalone obligation, not an accessory one
The common practice of treating refraining as a formality within the reporting process is legally wrong and operationally dangerous. They are two separate duties, with different content and independent penalty consequences. An entity may have filed its report on time and in the proper form and yet, in the same case, have breached the duty to refrain. It is precisely this distinction that accounts for much of the administrative litigation in AML/CFT matters.
The two exceptions and the burden of proof
Article 19 itself allows the transaction to be executed when refraining is not possible or when it could hinder the investigation, requiring in both cases a report immediately afterwards. What the law does not say (and supervisory practice does require) is that the exception must be shown to apply. A reasoned note made at the time of the decision, together with the technical evidence supporting the impossibility, is the difference between a legitimate exception and an improper execution.
Relationship with the tipping-off prohibition
Refraining necessarily coexists with the prohibition of disclosure in Article 24: the transaction is stopped, but the customer cannot be told why. This tension is what makes a pre-approved customer service script essential. Improvising in front of a customer who demands explanations is the most common source of improper disclosures.
What changes with the AMLR and ANIFI
Regulation (EU) 2024/1624 (AMLR), applicable from July 10, 2027, keeps the scheme of refraining with immediate reporting and makes it directly applicable EU law, narrowing the room for national implementation. In parallel, the draft bill (anteproyecto) creating the National Financial Integrity Authority (ANIFI) strengthens the authority’s powers to order the suspension of transactions and the freezing of accounts, which makes it even more important to draw a precise line between the obliged entity’s own decision to refrain and administrative freezing. You can find the details on our ANIFI page.
Related obligations
AML/CFT system
Official sources
Key legislation, linked to the official text:
- Law 10/2010 of April 28 on the prevention of money laundering and terrorist financingBOE · consolidated text
- Regulation (EU) 2024/1624 of May 31, 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financingEUR-Lex · Official Journal of the EU
- Royal Decree 304/2014 of May 5 approving the Regulations implementing Law 10/2010 of April 28 on the prevention of money laundering and terrorist financingBOE · consolidated text
Legislation and links reviewed in .