Financial Crime World

Guatemala Takes Step Towards Effective Financial Crime Risk Assessment

In an effort to strengthen its financial sector and combat money laundering and terrorist financing (ML/TF), Guatemala has embarked on a systematic and multidisciplinary participatory process to assess the risks associated with these crimes. The World Bank facilitated this process, providing technical support and guidance throughout.

A Comprehensive Risk Assessment Tool

The risk assessment tool developed by the World Bank is an Excel-based model that enables countries to identify the main drivers of ML/TF risks. It provides a methodological process for analyzing the causal relations among money laundering risk factors and variables relating to the regulatory, institutional, and economic environment.

Key Features of the Risk Assessment Tool

  • Enables identification of main drivers of ML/TF risks
  • Analyzes causal relations among money laundering risk factors and environmental variables
  • Assigns ratings to input variables based on quantitative and qualitative data

Guatemala’s Risk Assessment Working Group

Guatemala’s risk assessment working group, comprising representatives from government agencies, financial institutions, and other relevant stakeholders, has been actively engaged in applying the risk assessment tool. The working group assigns ratings to input variables related to their area of expertise, justifying those ratings with quantitative and qualitative data. Each input variable has an assigned weight and impact on the vulnerability level of the assessed sector or product.

Phases of the Risk Assessment Process

  1. Preparation Phase
    • Set up a national working group
    • Collect pre-assessment data and information
  2. Assessment Phase
    • Workshop for training on risk assessment tool
    • Launch assessment process
  3. Finalization Phase
    • Discuss risk assessment results
    • Design risk-based action plans
    • Address implementation issues

Outputs of the Risk Assessment Process

The outputs of this process include:

  • A populated risk assessment tool highlighting areas of higher, medium, or lower risk in various sectors and at a national level
  • A risk assessment report documenting the assessment process, findings, and evidence
  • A risk-based action plan outlining measures to prevent and mitigate identified ML/TF risks

Expected Outcomes

Guatemala’s risk assessment is expected to enhance its capacity to combat financial crime, facilitate cooperation among AML/CFT stakeholders, and inform policy decisions. The World Bank’s role in this process has been limited to providing technical support, ensuring that the country takes ownership of its risk assessment process.