Financial Crime World

Ecuador Takes Steps to Improve Financial Crime Compliance, but Challenges Remain

Ecuador has made progress in implementing the Financial Action Task Force (FATF) Recommendations, a set of international standards aimed at preventing and combating money laundering and terrorist financing. However, the country still faces challenges in several areas, according to a recent report.

Technical Requirements: A Mixed Picture

The report notes that Ecuador is largely compliant with 15 of the FATF Recommendations, partially compliant with seven, non-compliant with four, and has not yet implemented two. These findings are based on the country’s Technical Compliance rating.

Areas Requiring Improvement

Some of the areas where Ecuador requires improvement include:

  • Confiscation and provisional measures: While the country has made efforts to enhance its laws in this area, it still needs to improve its procedures for confiscating assets and freezing bank accounts.
  • Terrorist financing offence: Ecuador’s legislation does not yet fully align with the FATF Recommendations on terrorist financing offences, including the definition of terrorism and the scope of applicable penalties.
  • Non-profit organisations: The country has not implemented adequate measures to regulate non-profit organizations, which can be vulnerable to abuse for money laundering and terrorist financing purposes.
  • Higher-risk countries: Ecuador has not yet developed a robust system to identify and assess higher-risk countries, which is essential for effective risk-based approach to combating financial crime.

Progress in Other Areas

However, Ecuador has made significant progress in several areas, including:

Customer Due Diligence

  • The country has implemented robust customer due diligence measures, including verifying the identity of customers and understanding their business activities.
  • This demonstrates a commitment to ensuring that financial institutions are aware of their customers’ identities and business activities.

Politically Exposed Persons (PEPs)

  • Ecuador has established a clear definition of PEPs and has put in place measures to enhance transparency and reporting requirements for PEPs.
  • This helps to prevent the abuse of financial systems by individuals with significant influence or power.

Financial Intelligence Units

  • The country’s financial intelligence unit (FIU) is operational and plays an important role in analyzing suspicious transactions and providing reports to law enforcement agencies.
  • This enables law enforcement agencies to take action against those who engage in financial crime.

Next Steps

To address the remaining challenges, Ecuador should:

  • Enhance its laws and procedures on confiscation and provisional measures
  • Strengthen its terrorist financing offence legislation
  • Implement adequate measures to regulate non-profit organizations
  • Develop a robust system to identify and assess higher-risk countries

By addressing these areas of concern, Ecuador can further improve its compliance with the FATF Recommendations and strengthen its efforts to prevent and combat money laundering and terrorist financing.