Financial Crime World

Guatemala Faces Challenges in Implementing Effective Anti-Money Laundering Regulations

Guatemala’s efforts to combat money laundering have been hindered by outdated and uneven regulations, corruption, and political interference, according to experts. The country’s anti-money laundering (AML) system has been described as “sprawling, diverse, and complex,” with strict requirements for normal citizens but lax enforcement for those in power.

Challenges in Combating Money Laundering

  • Extortion and Political Corruption: Guatemala is plagued by extortion, which drives migration and results in estimated annual losses of $400 million. Political corruption is also rampant, with 11 out of the past 13 ministers of communication and housing accused or convicted of serious corruption.
  • Lack of Political Will: The lack of political will to address money laundering has led to a significant amount of criminal proceeds being laundered annually, estimated to be between $1.1 billion and $2.7 billion.
  • No Beneficial Ownership Legislation: Guatemala’s legal framework is outdated, with no beneficial ownership legislation, fintech law, or regulation of some financial institutions.
  • Lax Enforcement: The country’s judiciary is also highly corrupt, with bribery being common practice.

Key Vulnerabilities in the Economy

  • Credit Unions: Credit unions are identified as key vulnerabilities in the economy for money laundering.
  • Vehicle Sales, Real Estate, NGOs, and Armored Car Services: These sectors are also vulnerable to money laundering.

Channels Used to Launder Money

  • Banks
  • Political Campaigns
  • Shell Companies
  • Construction and Infrastructure Projects
  • Misinvoicing
  • Supermarkets
  • Gas Stations
  • Even Churches

Support from the US and Challenges in Implementing AML Regulations

  • US Support: The US has played a significant role in supporting Guatemala’s anti-money laundering efforts, but aid was cut during the Trump administration, harming anti-corruption initiatives.
  • Lack of Political Will to Implement AML Regulations: Preventing financial crime is not high on the political agenda, and transparency and anti-corruption efforts have been rolled back by the Morales administration.

Free Guide to AML Compliance in Latin America and the Caribbean

A free guide to AML compliance in Latin America and the Caribbean is available for download. The guide provides an overview of key challenges and issues, as well as a country-by-country assessment of AML risks and laws.