Honduras’ Financial Crime Definition Leaves Room for Improvement, Says FATF
The Financial Action Task Force (FATF) has recently released a mutual evaluation report on Honduras’ implementation of technical requirements to prevent financial crime. The report provides a mixed review, with the country scoring partially compliant or largely compliant in most areas, but falling short in several key aspects.
Assessing Risk and Applying a Risk-Based Approach
Honduras has made significant progress in assessing risk and applying a risk-based approach to combating money laundering and terrorist financing. However, it still needs to strengthen its national cooperation and coordination mechanisms to ensure that financial institutions are better equipped to detect and prevent suspicious transactions.
National Cooperation and Coordination Mechanisms
- Need for greater oversight and enforcement of anti-money laundering measures
- Limitations in resources and capacity hinder the effectiveness of the country’s financial intelligence unit
Laws and Regulations
Honduras scored well on its laws and regulations related to money laundering and terrorist financing offenses, as well as its provisions for confiscation and provisional measures. However, it was found to be partially compliant in terms of customer due diligence requirements, with some financial institutions failing to adequately verify the identity of their customers.
Customer Due Diligence Requirements
- Financial institutions need to improve verification of customer identities
- Clear guidance is needed on laws and regulations related to money or value transfer services
Regulation and Supervision
Honduras’ regulation and supervision of financial institutions were also found to be largely compliant, but the report highlighted a need for greater oversight and enforcement of anti-money laundering measures.
Regulation and Supervision of Financial Institutions
- Greater oversight and enforcement needed to ensure effective implementation of anti-money laundering measures
- Designated non-financial businesses and professions (DNFBPs) require stronger regulations and supervision
Targeted Financial Sanctions
The FATF report also noted that Honduras has made progress in implementing targeted financial sanctions related to terrorism and terrorist financing, but more work is needed to ensure that these sanctions are effectively enforced.
Targeted Financial Sanctions
- Need for greater resources and capacity to enforce targeted financial sanctions
- Clear guidance is needed on laws and regulations related to money or value transfer services
Areas for Improvement
The report identified several areas where Honduras needs to improve, including:
- Strengthening its regulations and supervision of DNFBPs
- Improving customer due diligence requirements
- Enhancing transparency and accountability in financial transactions
- Increasing resources and capacity for financial intelligence units
Overall, while Honduras has made significant progress in implementing anti-money laundering and combating the financing of terrorism measures, it still faces challenges in several areas. The FATF report provides a roadmap for the country to improve its financial crime definition and implementation, with the aim of increasing transparency, accountability, and effectiveness in preventing financial crime.