Financial Crime World

Honduras Banking Anti-Money Laundering Laws a Growing Concern for US Firms

The Honduran banking system has experienced significant growth and expansion in recent years, with total assets reaching $22.8 billion in 2018. However, the country’s anti-money laundering laws have raised concerns for US businesses operating in the region.

Honduran Banking System Regulation

According to a report from the U.S. Commercial Service, Honduras’ banking system is governed by:

  • Central Bank Reform Law (revised in 2004): This law aims to bring the Honduran financial sector regulation into compliance with internationally recognized Basel core principles for effective banking supervision.
  • Financial System Law (Decree No. 129-2004): This law provides the regulatory framework for the Honduran banking system.

Foreign Investment and Banking Ownership

While there are few legal barriers to entry in the banking sector, most foreign investment has been in regional, rather than Honduran-only, banks. Several banks have majority foreign ownership, including:

  • Banco Citibank de Honduras, S.A.: A subsidiary of Citigroup
  • Davivienda Bank S.A.: A Colombian bank with operations in Honduras
  • BAC/Honduras: A Honduran bank with majority foreign ownership

Recent Reforms and Regulations

In 2016, Congress updated the Financial Law to adjust its legal framework to international best practices, and regulations for the Money Laundering Law were also approved.

Recommendations for US Firms Operating in Honduras

The U.S. Commercial Service recommends that companies operating in Honduras conduct thorough due diligence and implement robust anti-money laundering controls to avoid any potential risks.

Opportunities for US Businesses

The Honduran banking system maintains 50.2 percent of its deposits in US banks and financial institutions, which could be an opportunity for US businesses looking to expand their operations in the region.

Conclusion

While the Honduran banking system presents opportunities for US firms, it’s essential to be aware of the country’s anti-money laundering laws and regulations to avoid any potential risks. The U.S. Commercial Service is available to provide guidance and support to US companies operating in Honduras.