Financial Crime World

Cryptocurrency and Anti-Money Laundering Laws in Peru Pose Significant Challenges

Peru’s commitment to anti-money laundering (AML) measures has been robust, but enforcement remains lacking, according to experts. The country’s informal economy, which accounts for around 70% of the population prior to the Covid-19 pandemic, presents significant risks of tax evasion, corruption, and money laundering.

Informal Economy and Illegal Mining

  • Peru’s informal economy is a major concern, driven by poverty and lack of government oversight.
  • Copper, zinc, gold, and other precious metals are mined in Peru, posing a significant risk for money laundering and corruption.
  • Nearly half of the financial intelligence reports in the last decade were connected to illegal mining.

Porous Borders and Drug Trafficking

  • Peru’s porous borders also make it an attractive route for drug trafficking.
  • An estimated $3.2 billion-$7.9 billion is laundered every year through these channels.
  • The country’s AML laws are weak in terms of prosecution but have stronger prevention methods.

National Plan Against Money Laundering and Terrorist Financing

  • The National Plan aims to address money laundering risks across the economy.
  • Peru has a range of laws in place, including Legislative Decree 1106, which sets out the legal framework for money laundering, illegal mining, and organized crime.

Weaknesses Remain

  • Cash traders, banks, and real estate are key channels for financial crimes and laundering cash.
  • Remittances from abroad are a significant risk factor, while the informal economy allows financial crimes to continue undetected.
  • Public financed projects and government assistance to vulnerable populations are also susceptible to money laundering and corruption.

Cryptocurrency as a Growing Concern

  • Peru is one of the top three countries in Latin America for cryptocurrency use, presenting significant money laundering challenges that the country is under-resourced to address.
  • The growing use of cryptocurrency poses significant challenges for AML compliance in Peru.

Commitment to Strengthening Transparency and Information Sharing

  • Despite these challenges, Peru has committed to strengthening transparency and information sharing in its fight against corruption.
  • It is considered broadly compliant with most of GAFILAT’s technical recommendations.

For more information on AML compliance in Latin America and the Caribbean, VinciWorks offers a free guide that provides an overview of key AML challenges and issues, as well as country-by-country assessments of AML risks and laws.