Financial Crime World

Ecuador’s Efforts to Combat Financial Crime Under Scrutiny in FATF Mutual Evaluation Report

Introduction

Ecuador has made some progress in implementing the technical requirements of the Financial Action Task Force (FATF) Recommendations, but significant gaps remain in its efforts to combat financial crime. The country received ratings that reflect its level of compliance with various aspects of anti-money laundering and counter-terrorism financing regulations.

Assessing Risk and Applying a Risk-Based Approach

Ecuador was found largely compliant (LC) in assessing risk and applying a risk-based approach, as outlined in Recommendation R.1. However, the report noted that the country’s risk assessment framework needs improvement to ensure it is comprehensive and effective.

National Cooperation and Coordination

The FATF Mutual Evaluation Report revealed that Ecuador was also largely compliant with Recommendation R.2 on national cooperation and coordination. The country has established a coordinated approach to combating financial crime, but the report suggested that further improvements are needed in this area.

Money Laundering Offense

Ecuador was rated as compliant (C) with Recommendation R.3 on money laundering offense, indicating that it has made significant progress in implementing laws and regulations related to this issue. However, the report highlighted the need for more effective enforcement mechanisms.

Confiscation and Provisional Measures

The country received a compliance rating of C for Recommendation R.4 on confiscation and provisional measures, reflecting its efforts to implement laws and regulations related to asset recovery and freezing.

Terrorist Financing Offense

Ecuador was found partially compliant with Recommendation R.5 on terrorist financing offense, indicating that it has made some progress in implementing laws and regulations related to this issue but still needs to address significant gaps.

DNFBPs: Customer Due Diligence

The country received a compliance rating of PC (partially compliant) for Recommendation R.22 on DNFBPs (designated non-financial businesses and professions) customer due diligence, reflecting its efforts to implement laws and regulations related to this issue but highlighting the need for more effective implementation.

Ecuador was found largely compliant with Recommendation R.24 on transparency and beneficial ownership of legal persons, indicating that it has made significant progress in implementing laws and regulations related to this issue.

International Cooperation

The country received a compliance rating of PC (partially compliant) for Recommendation R.27 on international cooperation, indicating that it has made some progress in implementing laws and regulations related to this issue but still needs to address significant gaps.

Anti-Money Laundering and Terrorist Financing Training

Ecuador was found partially compliant with Recommendation R.28 on anti-money laundering and terrorist financing training, reflecting its efforts to implement laws and regulations related to this issue but highlighting the need for more effective implementation.

Regulatory Requirements for Financial Institutions

The country received a compliance rating of PC (partially compliant) for Recommendation R.29 on regulatory requirements for financial institutions, indicating that it has made some progress in implementing laws and regulations related to this issue but still needs to address significant gaps.

Overall Assessment

Overall, Ecuador has made significant progress in implementing laws and regulations related to anti-money laundering and terrorist financing but still needs to address significant gaps in certain areas. The country’s compliance rating is PC (partially compliant). Recommendations for improvement include:

  • Enhancing the effectiveness of its financial intelligence unit
  • Improving the quality of its customer due diligence processes
  • Strengthening its regulations related to correspondent banking and money or value transfer services
  • Increasing transparency in beneficial ownership of legal persons and arrangements
  • Enhancing its international cooperation efforts
  • Providing more effective anti-money laundering and terrorist financing training for relevant professionals

Ecuador should address these gaps to enhance the effectiveness of its anti-money laundering and terrorist financing regime. The FATF should continue to monitor Ecuador’s progress in implementing the Recommendations and consider re-rating its compliance level as necessary.