Ecuador Takes Step towards Implementing Risk-Based Approach to Financial Crime Compliance
Progress and Challenges in Implementing AML/CFT Framework
In a move aimed at bolstering its anti-money laundering (AML) and combating the financing of terrorism (CFT) framework, Ecuador has started to adopt a risk-based approach to financial crime compliance. This approach involves assessing the level of risk associated with various transactions and activities, and implementing measures accordingly.
Assessment by International Watchdogs
According to a recent assessment by international watchdogs, Ecuador has made significant progress in implementing certain technical requirements of the Financial Action Task Force (FATF) Recommendations. However, there are still areas that require improvement.
Key Areas of Progress
One key area where Ecuador has shown improvement is in assessing risk and applying a risk-based approach to AML/CFT compliance. The country’s financial institutions have begun to assess the risks associated with their customers and transactions, and implement measures to mitigate those risks.
Another area of progress is in national cooperation and coordination. Ecuador’s authorities have strengthened their collaboration with each other and with international partners to combat financial crime.
Areas for Improvement
However, there are still several areas where Ecuador needs to improve. For instance:
- Prevention of misuse of non-profit organizations: Ecuador has not yet fully implemented measures to prevent the misuse of non-profit organizations for terrorist financing.
- Customer due diligence and record-keeping laws: The country’s laws on customer due diligence and record-keeping require strengthening.
International Observers’ Recommendations
Ecuador’s efforts to implement a risk-based approach to financial crime compliance are welcomed by international observers. However, the country needs to continue working to address the remaining gaps in its AML/CFT framework.
Rating:
- R.1 - Assessing risk & applying risk-based approach: Largely Compliant
- R.2 - National cooperation and coordination: Largely Compliant
- R.3 - Money laundering offence: Largely Compliant
- R.4 - Confiscation and provisional measures: Partially Compliant
- R.5 - Terrorist financing offence: Partially Compliant
- … (and so on)
Recommendations for Ecuador
To strengthen its AML/CFT framework, Ecuador should:
- Continue to implement measures to prevent the misuse of non-profit organizations for terrorist financing.
- Strengthen laws and regulations on customer due diligence and record-keeping.
- Improve international cooperation and coordination to combat financial crime.
By implementing a risk-based approach to financial crime compliance, Ecuador can better prevent and detect money laundering and terrorist financing activities, and protect its financial system from abuse. International observers will continue to monitor the country’s progress in this area.