Financial Crime World

AML Compliance Challenges in Guatemala

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Guatemala’s complex and outdated anti-money laundering (AML) system poses significant risks for organizations operating in the country. The lack of political will, weak institutions, and corruption have created an environment conducive to money laundering.

Key Risks

  • Extortion: A major problem in Guatemala, with estimated annual losses of $400 million.
  • Political interference: The Morales administration has undermined anti-corruption efforts and interfered with international organizations tasked with investigating serious crime.
  • Corruption: Widespread corruption affects all levels of society, with 11 out of 13 past ministers of communication and housing accused or convicted of serious corruption.
  • Economic inequality: Less than half the population has a bank account, and around 20% do not have identification.

Criminal Proceeds

An estimated $1.1 billion to $2.7 billion is laundered every year in Guatemala.

AML Policy Summary

Guatemala’s AML system is seen as seriously flawed, with weak prevention and detection capabilities but stronger investigation and prosecution systems.

  • 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: Obligated lawyers and notaries under AML.

Weaknesses

Key vulnerabilities in the economy for money laundering include:

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

A wide variety of channels are used to launder money in Guatemala, including banks, political campaigns, shell companies, construction and infrastructure, misinvoicing, supermarkets, gas stations, and even churches.

Preventing Financial Crime

Efforts to improve transparency and anti-corruption have been rolled back by the Morales administration. The judiciary is also seen as highly corrupt, with bribery common among those responsible for nominating judges.

US Support

The US has a significant role in supporting Guatemala, but aid was cut during the Trump administration, which harmed anti-corruption efforts.

Additional Resources

VinciWorks has created a guide to support businesses operating in Latin America and the Caribbean. The guide provides an overview of key AML challenges and issues and includes a country-by-country assessment of AML risks and laws.