Financial Crime World

Haiti Struggles with Poverty and Corruption Amid Growing Economic Woes

============================================================

Despite a slight growth in GDP, Haiti’s economy remains severely impoverished, with a significant fiscal deficit forecasted for 2018. The country relies heavily on foreign aid and remittances, which account for approximately 29.4% of its GDP.

Crime and Corruption Plague the Nation

Haiti’s geographical location, limited resources, and porous borders make it an attractive haven for criminals, including drug traffickers, human traffickers, and money launderers. The country’s financial system is also vulnerable to illicit activities, with many banks and microfinance institutions unsupervised in their anti-money laundering and combating the financing of terrorism (AML/CFT) compliance.

Human Trafficking and Smuggling on the Rise

Human traffickers and migrant smugglers have exploited Haiti’s vulnerability for financial gain, making it a lucrative criminal enterprise. The country’s lack of resources and corruption only exacerbate the problem.

Insufficient Supervision of Financial Institutions

  • Insurance companies are unsupervised in their AML/CFT compliance.
  • Microfinance institutions are also unsupervised in their AML/CFT compliance.
  • The DNFBPs sector remains completely unregulated, making them susceptible to money laundering and terrorist financing.

Terrorism Financing a Concern

Despite not conducting any assessment of terrorist financing within the country, Haiti’s lack of resources, corruption, and civil unrest make it an attractive location for terrorists to finance their activities.

AML/CFT Framework Lacking

  • Haiti’s AML/CFT framework remains inadequate and requires significant improvement to bring it in line with global standards.
  • The country has enacted and amended several laws aimed at addressing deficiencies identified in previous evaluations, but significant gaps remain.

Conducting Risk Assessments a Priority

  • The absence of a formal money laundering/terrorist financing risk assessment has hindered the development of policies and risk-mitigating measures to address these threats.
  • However, some financial institutions have implemented measures based on their knowledge and experience.

De-Risking Practice Widespread

  • Some financial institutions are engaging in de-risking practices, terminating or not onboarded customers considered vulnerable to money laundering/terrorist financing.
  • This practice is seen as a way to curb ML/TF risk, but it also raises concerns about the impact on legitimate businesses and individuals.

CNLBA Lacking Key Members

  • The CNLBA, responsible for cooperation and coordination at the policy level, lacks key members, including LEAs and the PPO, despite their critical roles in the AML/CFT system.