Financial Crime World

Guatemala’s Banking Regulations and Compliance: A Stable System with Room for Improvement

Guatemala’s banking system remains stable and robust, with a total of 18 commercial banks holding an estimated $63.8 billion in assets as of April 2023. The six largest banks dominate the market, controlling around 87% of total assets.

Strengthening Regulations

Despite this stability, regulatory authorities are actively working to strengthen the sector through legislation. In recent years, Guatemala has passed laws aimed at improving supervision and prudential regulation of financial institutions, including anti-money laundering and counter-terrorism financing measures.

Recent Reforms

  • The Guatemalan Congress has approved reforms to the Banking and Financial Groups Law and the Central Bank Organic Law, which will enhance the effectiveness of these regulations.
  • Proposed amendments to the Banking and Financial Groups Law and an anti-money laundering and counter-terrorism financing draft law are pending congressional approval.

Exchange Regime

Guatemala maintains an open and unrestricted exchange regime, with no restrictions on converting or transferring funds associated with an investment into a freely usable currency at a market-clearing rate. The exchange rate is determined by market conditions, with the Central Bank intervening only to prevent sharp movements.

  • Banks in Guatemala are permitted to offer accounts and conduct business in any foreign currency.
  • There are no legal constraints on the quantity of remittances or other capital flows.
  • However, a regulation was approved in 2010 establishing limits for cash transactions of foreign currency to reduce the risks of money laundering and terrorism financing.

Exchange Rate Stability

The reference exchange rate of Quetzals (GTQ) to the U.S. dollar (USD) has remained relatively stable since 1999.

  • Citibank N.A., Guatemala Branch has maintained operations in Guatemala since 1990, providing a key link between local and international financial markets.

Challenges and Opportunities

Despite these efforts, Guatemala’s banking system still faces challenges related to compliance with international standards and regulations. The country’s Financial Action Task Force (FATF) status was upgraded from “non-cooperating” to “compliant” in July 2004, indicating progress towards improving its anti-money laundering and counter-terrorism financing regime.

Additional Resources

For more information on Guatemala’s banking system and regulatory environment, interested parties can consult the Investment Climate Statement or contact local financial institutions.