Financial Crime World

Ecuador Fails to Meet International Standards in Combating Financial Crime

Overview

Ecuador has been found lacking in its efforts to combat financial crime and meet international standards set by the Financial Action Task Force (FATF). The evaluation, which assesses countries’ implementation of FATF recommendations, reveals significant gaps in Ecuador’s anti-money laundering and counter-terrorist financing regime.

Areas of Concern

The report highlights several areas where Ecuador has failed to meet expectations:

Risk Assessment and Risk-Based Approach

  • In assessing risk, Ecuador was deemed “largely compliant” (LC), indicating that while it has some measures in place, there are still weaknesses in its system.
  • The country’s national cooperation and coordination efforts were also found to be largely compliant.

Laws and Regulations

  • Ecuador’s laws do not adequately criminalize money laundering, a key recommendation of the FATF.
  • The country’s confiscation and provisional measures are insufficient, leading to a partial compliance rating.

Terrorist Financing Offences and Sanctions

  • Ecuador was found to be largely compliant in terrorist financing offences but partially compliant in targeted financial sanctions related to terrorism and terrorist financing.

Regulation and Supervision of Financial Institutions

  • The country’s regulation and supervision of financial institutions, DNFBPs (designated non-financial businesses and professions), and correspondent banking were also partially compliant.

FATF Recommendations

The FATF’s evaluation highlights several areas where Ecuador has failed to meet international standards:

  • Confiscation and provisional measures: The country does not have adequate measures in place.
  • Powers of supervisors: Ecuador’s supervisors do not have sufficient powers to enforce anti-money laundering regulations.
  • Financial intelligence units: The country does not have a functional financial intelligence unit.
  • Responsibilities of law enforcement and investigative authorities: Ecuador’s law enforcement and investigative authorities do not have clear responsibilities in combating financial crime.
  • Powers of law enforcement and investigative authorities: The country’s law enforcement and investigative authorities do not have sufficient powers to investigate and prosecute financial crimes.

Consequences

Ecuador’s failure to comply with FATF recommendations has significant implications for its reputation and economic stability. The country’s banks, businesses, and individuals may face increased scrutiny and potential sanctions if it does not take swift action to address these concerns.

Conclusion

The FATF’s evaluation is a wake-up call for Ecuador to take immediate action to address these shortcomings. By strengthening its anti-money laundering and counter-terrorist financing regime, the country can prevent the misuse of its financial system, protect its reputation, and maintain economic stability.