Financial Crime World

Financial Crime Reporting Procedures in Guatemala Under Scrutiny

Guatemala’s financial crime reporting procedures have come under intense scrutiny, with experts citing numerous challenges and weaknesses in the country’s Anti-Money Laundering (AML) system.

Challenges to AML Framework

  • The country’s AML framework has been described as outdated, unevenly implemented, and riddled with corruption.
  • Political interference has hindered anti-corruption efforts, with President Morales expelling an international body tasked with investigating serious crimes and dismissing special prosecutors appointed to tackle corruption and money laundering.

Extortion and Money Laundering

  • Guatemala is plagued by extortion, which accounts for a significant portion of the country’s criminal activities.
  • An estimated $400 million in extorted funds is laundered annually, making it one of the highest rates in Central America.

Corruption and Impunity

  • Corruption is a pervasive problem in Guatemala, affecting all levels of society.
  • Anti-corruption laws are often used against political opponents of the regime, while an opaque network of private companies, public contracts, and government officials has created a culture of impunity.
  • Economic inequality is also a significant challenge, with less than half the population having a bank account and around 20% without identification.

Urgent Need for Robust AML Procedures

  • The estimated $1.1 billion to $2.7 billion laundered annually in Guatemala highlights the urgent need for robust AML procedures.
  • However, the country’s investigation and prosecution systems are seen as stronger, but weak prevention and detection capabilities remain a major concern.
  • Lawyers and notaries were designated as obligated subjects under AML requirements in 2020, but the legal framework is severely outdated.
  • Guatemala lacks beneficial ownership legislation, a fintech law, and some financial institutions operate with minimal regulation.

Vulnerabilities in the Economy

  • Key vulnerabilities in the economy for money laundering exist, including:
    • Credit unions
    • Vehicle sales
    • Real estate
    • NGOs
    • Armored car services

Complex Web of Facilitators

  • A complex web of facilitators, including bankers, lawyers, notaries, politicians, and political operatives, makes money laundering relatively easy in Guatemala.

Political Collusion and Corruption

  • Efforts by President Morales to undermine anti-corruption and anti-money laundering efforts demonstrate criminal collusion at the highest political levels.
  • The judiciary is also seen as highly corrupt, with bribery widespread among judges’ guilds.

Support from the US

  • The US has played a significant role in supporting Guatemala, but aid cuts during the Trump administration hindered anti-corruption efforts.

VinciWorks Guide to AML Challenges

  • VinciWorks has created a guide to support businesses operating or planning to operate in Latin America and the Caribbean.
  • The guide provides an overview of key AML challenges and issues, as well as a country-by-country assessment of AML risks and laws.