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Honduras Struggles with Banking Compliance Issues, FATF Report Reveals
A recent report from the Financial Action Task Force (FATF) has highlighted significant concerns about Honduras’ efforts to combat money laundering and terrorist financing. The country’s ratings reflect its implementation of technical requirements, revealing a patchwork of compliance.
Assessment of Risk and Compliance
Honduras received a “partially compliant” rating in assessing risk and applying a risk-based approach, indicating that while it has made progress in this area, there is still room for improvement. National cooperation and coordination also fell short, earning a “largely compliant” rating.
Definition of Money Laundering Offense
Honduras struggled with the definition of money laundering offense, earning a “compliant” rating. Confiscation and provisional measures received a similar rating, indicating that while some progress has been made, there are still concerns about effectiveness.
Weaknesses in Other Areas
In other areas, Honduras scored poorly:
- Terrorist financing offense: “partially compliant”
- Targeted financial sanctions related to terrorism and terrorist financing: “partially compliant”
- Correspondent banking: “partially compliant”
Additionally, Honduras received low scores in the following areas:
- Financial institution secrecy laws
- Customer due diligence
- Record keeping
- Politically exposed persons
Positive Developments
On a more positive note, Honduras showed improvement in areas such as:
- Transparency and beneficial ownership of legal persons
- Regulation and supervision of financial institutions
- Financial intelligence units
However, significant concerns remain, particularly with regards to the country’s powers of supervisors, law enforcement and investigative authorities, and cash couriers.
Urgent Reforms Needed
The report’s findings are a wake-up call for Honduras’ banking sector, highlighting the need for urgent reforms to address compliance issues. The country must work to strengthen its efforts to combat money laundering and terrorist financing if it is to avoid further international scrutiny and sanctions.