Financial Crime World

El Salvador’s Financial Watchdog Allows Suspected Money Launderers to Keep Bank Accounts

In a shocking move, El Salvador’s financial regulatory agency has instructed banks not to close the accounts of suspected or formally accused money launderers. This decision has sparked outrage among anti-corruption advocates and directly opposes the country’s chief anti-money laundering law.

The Regulation

Under the new regulation issued by Héctor Gustavo Villatoro, head of the Financial System Superintendence (SSF), banks are prohibited from terminating commercial ties with alleged financial criminals based on mere suspicions or accusations. This means that suspected money launderers can continue to control their assets and accounts even after criminal court cases have begun.

Concerns and Criticism

The move has raised concerns about the ability of government officials and economic elites implicated in bribery schemes and money laundering operations to maintain their ill-gotten gains. Several high-profile figures, including ex-Attorney General Luis Mártinez and businessman Enrique Rais, have been accused of financial crimes in recent years.

  • Mártinez was arrested in 2016 for conspiring to defraud the judicial system.
  • Rais remains at large, living in a luxurious hideout in Switzerland.
  • Despite being found guilty of money laundering and embezzlement, Saca, the former president who appointed Villatoro as director of customs, received a 10-year prison sentence.

Criticism and Consequences

The SSF’s new regulation has been criticized for legitimizing legal loopholes that allow corrupt officials to maintain control over their assets even while fleeing prosecution. El Salvador was suspended from the Egmont group, an international association of Financial Intelligence Units dedicated to upholding international standards against money laundering and terrorist financing, in 2016 after then-President Salvador Sánchez Cerén vetoed a proposed amendment that would have given autonomy to the Attorney General’s Office’s Financial Investigation Unit.

  • The regulation undermines El Salvador’s own anti-money laundering law.
  • It insulates officials against corruption charges.
  • The move has sparked concerns about the country’s ability to effectively combat financial crimes and prevent pre-trial escape of criminals with ill-gotten gains.

International Implications

Despite participating in international anti-money laundering efforts, El Salvador’s latest move undermines its commitment to these efforts. The regulation sends a message that corrupt officials can maintain their power and wealth without accountability, undermining trust in the country’s financial system and institutions.