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Guatemala’s Digital Currencies and Money Laundering Risks: A Growing Concern
Guatemala has been working to update its laws to prevent money laundering and terrorist financing, a bid to stay ahead of evolving financial crimes. Despite adopting anti-money laundering and anti-terrorism financing laws in 2001 and 2005 respectively, experts say these measures are no longer sufficient given the increasingly sophisticated methods used by criminals.
New Bill Proposes Updates
A new bill, number 5820, was presented to Congress in November 2020 with the aim of updating and unifying Guatemala’s anti-money laundering and anti-terrorism financing laws. The proposed legislation aims to incorporate international best practices and standards set forth by the Financial Action Task Force (FATF).
Key Definitions
The bill provides several key definitions, including:
- Due diligence requirements: Obligated persons, such as financial institutions and companies that offer services related to digital currencies and cryptocurrencies, will be required to register with the authorities and comply with a series of obligations and prohibitions.
- Digital wallet providers and cryptocurrency exchanges: These entities may be classified as obligated persons, requiring them to report suspicious transactions and refrain from certain activities.
Concerns Among Companies
The proposed legislation has raised concerns among companies operating in this space, which are currently not regulated by Guatemalan law. The lack of clarity on the scope of obligations and prohibitions may lead to uncertainty and increased costs for these companies.
Broader Definitions of Money Laundering and Terrorist Financing
The bill updates the definition of money laundering and terrorist financing to include a wider range of predicate offenses and broader definitions of transfer of funds and securities. This means that individuals and entities will need to be more vigilant when carrying out financial transactions, particularly those involving digital currencies.
Current Status and Implications
The proposed legislation is currently being reviewed by two congressional commissions before it is put to a vote. If passed, the bill could have significant implications for Guatemala’s financial sector and its efforts to combat money laundering and terrorist financing.