Controversial Money Laundering Reform in Honduras: Dozens Freed from Alleged Organized Crime Ties

Surprising Releases Following Controversial Honduran Reform

In a shocking turn of events, Honduras, which strengthened its money laundering laws a year ago, has seen the release of over 45 individuals with alleged ties to organized crime. In the wake of a controversial reform to Honduras’ Special Law Against Asset Laundering, investigators are left questioning the motives behind the new legislation.

A Year since Controversial Honduran Reform: Doubts and Concerns

One year after the government published the reforms to the law, doubts and concerns have grown about its intentions. An investigation by El Heraldo, published on October 25, 2022, uncovered that at least 45 individuals, suspected of money laundering, and fronting for drug cartels, have been freed from Honduran prisons.

The New Reform’s Measures and Their Impact on Prosecutions

The reform, which came into effect last November, placed additional hurdles for Honduran authorities in the prosecution of cases of unexplained wealth. This change necessitated that prosecutors provide conclusive proof that those suspicious assets are linked to another crime – such as drug trafficking or arms trafficking – to charge individuals with money laundering. Furthermore, investigators must now obtain prior judicial approval to access financial records.

High-Profile Releases and Controversial Decisions

Several high-profile individuals have been released following the controversial reform. Notable releases include former congressman Seth Paisano Wood and his brother Roberto, who were accused of running a drug trafficking network in the department of Gracias a Dios. They were arrested in October 2019, but were never formally charged with drug trafficking instead, they were convicted of money laundering due to their inability to explain their wealth, and were released less than two weeks after the new reform was passed.

Five other individuals were released after their arrests during Operation Arcano in 2019. The operation revealed that several construction, heavy machinery, and oil derivative companies had no legal source of income. The companies’ owners were suspected of laundering money for well-known Honduran drug traffickers, including the Valle Valle group.

Criticism of the Reform from Law Enforcement

The ramifications of the reform extend beyond the loss of prosecutions in high-profile cases. The Chief Prosecutor for Honduras’ Special Prosecutor’s Unit Against Corruption Networks (UFERCO), Luis Javier Santos, has criticized the policy for effectively granting criminals immunity from prosecution.

“Entire gangs have been released from prison because of it,” Santos told InSight Crime. “If statistics were released detailing the individuals freed from prison due to the reform, you’d be shocked.”

“[The decree] was approved as part of a plan to limit and shield against future investigations,” he added.

Attempts to Overturn the Reform

The reform’s intent to shield against future investigations was not hidden. However, various attempts have been made to overturn the reform. In January 2023, the Attorney General’s Office called for the reform to be deemed unconstitutional. They expressed their opposition to the reform in a press release, stating, “it is a guarantee of impunity granted by the legislature to organized and white-collar crime.”

Recent Developments and Criticism in Honduran Politics

This latest development follows a series of contentious decisions made by the Honduran congress. In 2019, they passed a law criticized for protecting politicians from embezzlement of public funds investigations. Additionally, the newly elected government of Xiomara Castro faced criticism in 2023 due to a plan to grant amnesty to officials who had served under her husband, Manuel Zelaya (2006-2009).