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Honduras Faces Struggle to Enforce Anti-Money Laundering Regulations Amidst Widespread Corruption

Honduras, a Central American country plagued by corruption and drug trafficking, is struggling to implement effective anti-money laundering (AML) regulations amidst widespread political corruption. The country’s lack of political will and weak institutions have hindered efforts to combat money laundering, allowing criminal networks to flourish.

A Vulnerable Country

According to experts, Honduras is one of the most vulnerable countries in Latin America and the Caribbean when it comes to money laundering, with an estimated $351 million to $878 million laundered annually. State-sponsored drug trafficking, organized crime, extortion, and corruption are among the key risks facing the country.

Political Corruption

The US has named former President Juan Orlando Hernández as a “state-sponsor” of drug trafficking, while his wife, former First Lady Rosa Elena Bonilla de Lobo, was convicted of fraud and embezzlement before being acquitted. The country’s political system is widely seen as corrupt, with politicians and officials often using their positions to further their own interests.

Weak AML Laws

The Honduran government has enacted several AML laws, including the 2015 Special Law on Asset Laundering, the 2015 Law Regulating Designated Non-Financial Activities and Professions, and the 2010 Law on Definitive Deprivation of the Domain of Goods of Illicit Origin. However, these laws have been criticized for being weak and ineffective.

Corrupt Justice System

The country’s justice system has also been accused of being corrupt, with many cases involving high-ranking officials being dropped or dismissed due to lack of evidence or political pressure. The recent election of President Xiomara Castro, a former First Lady whose husband was accused of taking bribes from drug traffickers, has raised hopes that the country may be able to turn the corner and tackle corruption.

Challenges Ahead

However, experts warn that dismantling criminal structures deeply embedded in the state will be a major challenge for Castro’s administration. The country’s lawyers are also seen as key gatekeepers to the financial system, giving an easy point of entry for money laundering schemes involving real estate in Panama and the US.

A Guide to Support Businesses

In light of these challenges, VinciWorks has created a guide to support businesses operating or planning to operate in Latin America and the Caribbean, providing an overview of AML challenges and issues, as well as country-by-country assessments of AML risks and laws. The guide is available for download free of charge.

Download the Guide

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