Financial Crime World

Ecuador’s Financial Institutions Under Scrutiny: AML Programs Receive Mixed Ratings

The Financial Action Task Force (FATF), an international anti-money laundering (AML) watchdog, has released a report evaluating Ecuador’s financial institutions’ efforts to combat money laundering and terrorist financing. The report gives Ecuador’s AML program mixed grades, reflecting the country’s progress in implementing technical requirements of the FATF Recommendations.

Mixed Ratings

Ecuador received a rating of “largely compliant” in several areas:

  • Assessing Risk and Applying a Risk-Based Approach (R.1): The country was found to be largely effective in identifying and assessing risks related to money laundering and terrorist financing.
  • National Cooperation and Coordination (R.2): Ecuador’s efforts to coordinate with other countries and authorities were deemed satisfactory.
  • Transparency and Beneficial Ownership of Legal Persons (R.24): The country was found to be transparent in providing information on beneficial ownership of legal persons.

Additionally, Ecuador received high marks for:

  • Regulation and Supervision of Financial Institutions (R.26): The country’s regulatory framework was deemed effective in supervising financial institutions.
  • Powers of Supervisors (R.27): The powers granted to supervisors were found to be adequate.

Deficiencies

However, Ecuador fell short in several areas:

  • Confiscation and Provisional Measures (R.4): The country’s laws and regulations related to confiscation and provisional measures were found to be inadequate.
  • Targeted Financial Sanctions Related to Terrorism and Terrorist Financing (R.6): Ecuador was criticized for lacking a robust system for imposing targeted financial sanctions.
  • International Cooperation (R.37-40): The country’s international cooperation efforts were deemed insufficient.

Areas Requiring Improvement

The report highlights several areas where Ecuador’s AML program requires improvement:

  • Customer Due Diligence (R.10): The country was criticized for lacking robust customer due diligence measures.
  • Record Keeping (R.11): Ecuador’s record-keeping requirements were found to be inadequate.
  • Reliance on Third Parties (R.17): The country’s reliance on third parties to perform AML/CFT functions was deemed excessive.
  • Lack of Transparency: The report criticizes Ecuador for lacking transparency in certain aspects of its AML regime.

Conclusion

Overall, the FATF report concludes that while Ecuador has made progress in implementing its AML program, there is still much work to be done to bring the country into full compliance with international standards.