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Guatemala Confronts Unique AML Challenges
As part of its ongoing efforts to combat money laundering, Guatemala faces a complex web of challenges that set it apart from other countries in Latin America and the Caribbean. Despite being home to an estimated $1.1 billion to $2.7 billion in laundered funds annually, the country’s outdated legal framework and lack of political will pose significant obstacles for organizations looking to comply with anti-money laundering (AML) regulations.
Outdated Legal Framework and Lack of Political Will
Guatemala’s AML system is characterized by “unequal and outdated” rules that are often unevenly implemented. While normal citizens face strict AML requirements, those in power seem to operate under a more lax and flexible regime. Additionally, extortion - the highest rate of any Central American country - plays a significant role in driving migration and corruption.
Corruption
Corruption is another major challenge facing Guatemala, with an estimated 11 out of the past 13 ministers of communication and housing accused or convicted of serious corruption. The lack of political will to address these issues is compounded by President Morales’ expulsion of CICIG, an international body tasked with investigating serious crime in Guatemala, in 2019.
Weak Institutions and Limited Prevention and Detection Capabilities
The country’s AML policy summary highlights its weak institutions, outdated legal framework, and limited prevention and detection capabilities. Investigation and prosecution systems are stronger, but corruption within the judiciary further hinders efforts to combat money laundering.
Legal Frameworks
Guatemala has made some progress, designating lawyers and notaries as obligated subjects under AML regulations in 2020. However, the country still lacks beneficial ownership legislation, a fintech law, and some financial institutions remain unregulated.
Vulnerable Economy
The economy is also vulnerable to money laundering through various channels, including:
- Credit unions
- Vehicle sales
- Real estate
- NGOs
- Armored car services
Banks, political campaigns, shell companies, construction and infrastructure projects, misinvoicing, supermarkets, gas stations, and even churches have been caught up in money laundering schemes.
Combating AML Challenges
To combat these challenges, organizations operating in Guatemala or planning to expand to the country should consider VinciWorks’ free guide to AML compliance in Latin America and the Caribbean. The comprehensive resource provides an overview of key AML challenges and issues, as well as a country-by-country assessment of AML risks and laws.