Financial Crime World

Guatemala Struggles with Anti-Money Laundering Laws, Experts Say

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Guatemala’s anti-money laundering (AML) system has been deemed outdated and unevenly implemented, leaving the country vulnerable to financial crimes. According to VinciWorks, a leading compliance expert, Guatemala’s AML laws are strict for ordinary citizens but lax for those in power.

Political Interference and Corruption Plague AML System

Guatemala’s complex AML system is plagued by political interference, corruption, and economic inequality. President Morales’ decision to expel CICIG, an international body tasked with investigating serious crime, has further undermined anti-corruption efforts.

  • 11 of the past 13 ministers of communication and housing accused or convicted of serious corruption
  • Lack of political will and weak institutions contribute to AML challenges

Estimated $1.1 Billion to $2.7 Billion Laundered Annually in Guatemala

An estimated $1.1 billion to $2.7 billion is laundered annually in Guatemala, highlighting the need for robust AML measures. However, the country’s investigation and prosecution systems are stronger than its prevention and detection capabilities.

In 2020, lawyers and notaries were designated as obligated subjects under AML laws. However, the legal framework remains severely outdated, lacking:

  • Beneficial ownership legislation
  • Fintech law
  • Regulation of some financial institutions

Main Money Laundering Laws in Guatemala

Guatemala’s main money laundering laws include:

  • Law 67-2001: The country’s foundation AML law
  • Law 58-2005: Tackles terrorist financing
  • Law 55-2010: Allows for asset forfeiture and requires individuals accused of illicit enrichment to prove their assets were legally acquired
  • Law 58-2020: Obligates lawyers and notaries under AML

Economy Vulnerable to Money Laundering

The country’s economy is vulnerable to money laundering through:

  • Credit unions
  • Vehicle sales
  • Real estate
  • NGOs
  • Armored car services

A wide range of channels are used to launder money in Guatemala, including:

  • Banks
  • Political campaigns
  • Shell companies
  • Construction
  • Misinvoicing
  • Supermarkets
  • Gas stations
  • Even churches

Complex Web of Facilitators Makes it Easy for Criminals to Launder Money

A complex web of facilitators, including:

  • Bankers
  • Lawyers
  • Notaries
  • Politicians
  • Political operatives

makes it easy for criminals to launder money in Guatemala.

Efforts to Improve Transparency and Anti-Corruption Rolled Back

Efforts to improve transparency and anti-corruption have been rolled back by the Morales administration, and the judiciary is seen as highly corrupt. However, the US has played a significant role in supporting Guatemala, although aid was cut during the Trump administration, which harmed anti-corruption efforts.

Download VinciWorks’ Free Guide to Learn More

Experts at VinciWorks have created a comprehensive guide to help businesses navigate AML challenges in Latin America and the Caribbean. The guide provides an overview of key AML issues and includes a country-by-country assessment of AML risks and laws.

Download the free guide today to learn more about Guatemala’s AML challenges and how to comply with anti-money laundering regulations.