Money Laundering in Honduras: A Year After Reform, Dozens Freed and Speculation Mounts that Those in Power are Being Protected

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In the wake of Honduras’ reform to its money laundering law a year ago, dozens of individuals with alleged ties to organized crime have been freed from charges, sparking speculation that those in power are being protected.

The Controversial Reform

The Honduran government published legal changes to the Special Law Against Asset Laundering last November. These changes made it more challenging for prosecutors to charge individuals with money laundering by requiring conclusive evidence connecting suspicious assets to another crime, such as drug trafficking or arms trafficking. Additionally, financial records can no longer be accessed without prior judicial permission.

Those Released

Among those released is former congressman Seth Paisano Wood and his brother Roberto, who were suspected of running a drug trafficking network in the eastern department of Gracias a Dios. They were arrested in 2019 but never formally charged with drug trafficking. The pair was convicted of money laundering when prosecutors found their wealth had no legal or economic justification, but after two years in prison, they were released less than two weeks after the reform passed.

Five others were also released as part of Operation Arcano, which discovered that construction, heavy machinery, and oil derivative companies had no income to justify their assets. The owners were allegedly laundering money for well-known Honduran drug traffickers, including the Valle Valle group.

Criticism

The reform has been criticized by Luis Javier Santos, chief prosecutor for Honduras’ Special Prosecutor’s Unit Against Corruption Networks (UFERCO), who claims it has given criminals immunity from prosecution and allowed entire gangs to be released from prison. Santos believes the reform was intended to limit and shield against future investigations.

Attempts to Overturn the Reform

Attempts have been made to overturn the reform, with the Attorney General’s Office deeming it unconstitutional and the Supreme Court not being consulted on its legality. The reform fits a pattern of controversial legal changes in Honduras, including a 2019 law criticized for protecting politicians from investigation into embezzlement of public funds and a plan to grant amnesty to officials who served under former President Manuel Zelaya.

Motives Behind the Reform

The motives behind the reform remain unclear, but one thing is certain: the Honduran government’s decision to make it more challenging to prosecute money launderers has raised questions about its commitment to combating organized crime.