Money Laundering Techniques on the Rise in Guatemala
Guatemala has long been plagued by corruption, extortion, and weak anti-money laundering (AML) regulations, making it an attractive destination for money launderers. According to estimates, between $1.1 billion and $2.7 billion is laundered every year in the country.
A Weak Anti-Money Laundering System
The Guatemalan AML system is described as outdated and complex, with uneven implementation of rules. Money laundering requirements are strict for ordinary citizens but lax for those in power.
Key Vulnerabilities in the Economy
- Credit unions
- Vehicle sales
- Real estate
- NGOs
- Armored car services
Widespread Corruption
Corruption is widespread, affecting all levels of society, including government officials and public contracts. President Morales’ decision to expel CICIG, an international body tasked with investigating serious crime in Guatemala, has demonstrated the highest levels of criminal collusion at the political level.
Lack of Beneficial Ownership Legislation
The lack of beneficial ownership legislation makes it a challenging environment for AML compliance.
Channels Used for Money Laundering
A wide variety of channels are used to launder money in Guatemala, including:
- Banks
- Political campaigns
- Shell companies
- Construction
- Misinvoicing
- Supermarkets
- Gas stations
- Churches have been caught up in money laundering schemes.
A Complex Web of Facilitators
The complex web of facilitators, including bankers, lawyers, notaries, politicians, and operatives, makes money laundering relatively easy.
Rollback of Anti-Corruption Efforts
Efforts to improve transparency and anti-corruption have been rolled back by the Morales administration.
Corrupt Judiciary
The judiciary is highly corrupt, with the guild responsible for nominating judges known for bribery.
US Support for Guatemala
Despite these challenges, the US has a significant role in supporting Guatemala, but aid was cut during the Trump administration, harming anti-corruption efforts.
AML Risks and Laws in Latin America and the Caribbean
Businesses operating or planning to expand to Latin America and the Caribbean should be aware of these AML risks and laws to ensure compliance.