Financial Crime World

Honduras Banking Regulations Compliance: A Guide for US Businesses

The Honduran banking system has experienced significant growth and consolidation in recent years. With a minimal capital requirement of L/500 million ($21 million) to operate a bank, the industry is open to foreign investment. However, there are key regulations that US businesses must comply with when operating in Honduras.

Key Regulations

Governance and Supervision

  • The Honduran banking system is governed by a Central Bank reform law revised in 2004, which provides for stronger capitalization of the Central Bank by the central government.
  • The Banking Commission reform law and the Deposit Insurance Fund (FOSEDE) reform law transfer the responsibility for the restitution of troubled banks from FOSEDE to the Banking Commission.

Financial System Law

  • The Financial System law (Decree No. 129-2004) delineates the responsibilities of the Banking Commission and the Central Bank to supervise and regulate the country’s financial sector.

International Compliance

The Honduran financial sector regulation is aligned with internationally recognized Basel core principles for effective banking supervision. In 2016, Congress updated the Financial Law to adjust its legal framework to international best practices.

Bank Ownership and Management Restrictions

New restrictions on bank ownership and management have been imposed, including limits on foreign ownership. Several banks have majority foreign ownership, but most foreign investment has been in regional, rather than Honduran-only, banks.

Key Takeaways:

  • US businesses must comply with key regulations governing the Honduran banking system.
  • They must familiarize themselves with international compliance standards.
  • They must ensure they meet the requirements for bank ownership and management restrictions.
  • They must implement anti-money laundering measures to comply with the Money Laundering Law regulations.

By understanding these regulations, US businesses can ensure a successful entry into the Honduran market while maintaining compliance with local laws and regulations.