Financial Crime World

Guatemala’s Efforts to Combat Money Laundering and Terrorist Financing

Guatemala has made significant strides in understanding the risks associated with money laundering (ML) and terrorist financing (TF), but more needs to be done to effectively combat these crimes. In this article, we will explore Guatemala’s efforts to combat ML/TF, highlighting its strengths and weaknesses.

Understanding the Risks

Guatemala’s financial intelligence unit, the IVE, has enforced procedures and tools for supervising organizations subject to anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. However, there are still sectors and activities identified as high-risk that have not been included as organizations subject to AML/CFT regulations.

High-Risk Sectors and Activities

  • Microfinance institutions
  • Lawyers
  • Notaries
  • Casinos/video lotteries

The IVE has made efforts to register designated non-financial businesses and professions (DNFBPs) as regulated entities, but some remain unregistered. This highlights the need for improved dissemination of local and international typologies to enable organizations subject to AML/CFT regulations to identify potential risks of ML/TF and report unusual or suspicious transactions.

Challenges in Conducting Customer Due Diligence

  • Lack of reliable information on beneficial owners of corporations
  • Limited access to electronic records

These challenges make it difficult for organizations to conduct customer due diligence, which is a critical step in preventing ML/TF.

International Cooperation

Guatemala has been praised for its international cooperation, with mechanisms in place for:

  • Mutual legal assistance
  • Extradition
  • Financial intelligence sharing

The country has also signed agreements with other nations, including the United States, to combat transnational organized crime.

Priority Actions Required

To address these issues, Guatemala is required to take several priority actions, including:

  • Conducting a review of its risk analysis of TF to include possible abuses in the financial sector, DNFBPs, and non-profit organizations (NPOs)
  • Taking clear action for the inclusion of DNFBPs and microfinance institutions as reporting subjects and ensuring all activities, individuals, or legal entities that should be subject to AML/CFT regulations are registered and comply with obligations
  • Issuing relevant regulations and training for DNFBPs and NPOs on ML/TF risk management policies and informing them about the results of the National Risk Assessment (NRA)
  • Amending TF criminalization laws to cover requirements under Recommendation 5
  • Providing more resources to the IVE for risk supervision and implementing national policies and strategies to combat identified threats

Conclusion

By taking these actions, Guatemala can improve its understanding of ML/TF risks, increase suspicious transaction reports, and enhance its overall efforts to combat these crimes. Effective combating of ML/TF requires a comprehensive approach that addresses both the domestic and international aspects of these crimes.