Financial Crime World

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Latin American Countries Struggle to Combat Financial Crimes and Corruption

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A recent report highlights the challenges faced by several Latin American countries in combating financial crimes and corruption. While some progress has been made, significant issues remain, including organized crime, inadequate institutional frameworks, and limited prosecutions.

Brazil Makes Progress on Anti-Corruption Efforts

On a more positive note, Brazil has passed legislation aimed at combating money laundering and other forms of fraud. The country’s efforts have been recognized as substantial progress in the fight against corruption.

Mexico Faces Challenges in Combating Financial Crimes

In Mexico, criminal proceeds are estimated to range from $25 billion to $62 billion per year, with money laundering flowing from these activities amounting to $18 billion to $44 billion annually. Despite regulations, financial and political corruption remains a significant problem. Poor communication and coordination between government agencies, as well as limited understanding of trade-based money laundering, are contributing factors.

Challenges in Mexico

  • Criminal proceeds estimated at $25-62 billion per year
  • Money laundering flowing from these activities estimated at $18-44 billion annually
  • Financial and political corruption remains a significant problem

Guatemala and Honduras Struggle with Corruption

In Guatemala, the legal system is seen as flawed and uneven in its application, focusing more on ordinary citizens than those with significant financial or political influence. Criminal proceeds are estimated to range from $1.5 billion to $3.8 billion per year, with money laundering amounting to approximately $1.1 billion to $2.7 billion annually.

In Honduras, high-level corruption and power imposed by drug trafficking organizations plague the country. The country’s financial risk and corruption include high-level complicity with major drug trafficking organizations.

Guatemala

  • Criminal proceeds estimated at $1.5-3.8 billion per year
  • Money laundering amounting to approximately $1.1-2.7 billion annually

Honduras

  • High-level corruption and power imposed by drug trafficking organizations
  • Financial risk and corruption include high-level complicity with major drug trafficking organizations

Nicaragua Fails to Address Corruption

Nicaragua, under the authoritarian leadership of President Daniel Ortega, has impeded progress on financial corruption controls. The arrest and disqualification of an opposition leader was carried out under the pretext of money laundering charges, leading to concerns that the country’s business ownership registry is used to surveil political dissidents.

What Can Companies Do?

In light of these challenges, companies operating in Latin America are advised to implement several steps to avoid entanglement in malfeasance:

  • Carefully assess all business partners for source of wealth and ultimate beneficial ownership
  • Examine third-party vendors to confirm they are not operating under sanctions or have politically exposed individuals in key positions
  • Conduct ongoing supply chain audits focused on ethical integrity, especially in areas where human rights abuses have been reported
  • Stay up to date on legislative developments pertaining to risk and anti-corruption

IntegrityRisk Can Help

IntegrityRisk International is a leading provider of risk management and compliance services. Our experts can help companies operating in Latin America navigate the complex challenges posed by financial crimes and corruption. Contact us today to learn more about how we can assist your organization.