Common Predicate Offenses for Money Laundering: A Growing Concern
A recent report has highlighted the most common predicate offenses for money laundering in El Salvador, emphasizing the need for robust supervision to prevent similar issues from arising.
Most Common Predicate Offenses for Money Laundering
The report identifies the following as the most common predicate offenses for money laundering:
- Drug Trafficking: A significant concern for authorities and financial institutions.
- Gang Activity: Criminal organizations are increasingly using money laundering techniques to facilitate their illegal activities.
Government Transparency Concerns
El Salvador has taken steps to implement the Bitcoin Law, including creation of the Bitcoin Trust and investments by the government in Bitcoin. However, transparency in these procedures has been limited, according to official sources and previous studies conducted by national and international institutions.
- Limited Public Information: Despite legal mechanisms for individuals to access public information, the Law on Access to Public Information has not been meaningfully implemented.
- Government Purchases of Bitcoin: Responses from governmental authorities raise concerns regarding transparency and access to information, including information on government purchases of Bitcoin.
Recommendations
The report concludes with a series of recommendations to help El Salvador maximize the benefits associated with financial innovation while minimizing the risks:
Regulatory Recommendations
- Strengthen AML/CTF Laws and Regulations: Ensure that anti-money laundering and combating the financing of terrorism laws are robust and effective.
- Engage with the Legal and Business Community: Develop regulations for the Bitcoin Law and Digital Assets Issuance Law in collaboration with stakeholders.
- Respect Transparency and Access to Public Information: Guarantee transparency and access to public information, including information on government activities.
Operational Recommendations
- Incorporate Government Bitcoin Investments into Balance of Payments: Ensure that government Bitcoin investments are reflected in the Balance of Payments.
- Form an Inter-Agency Commission: Establish a commission to discuss criteria for opening accounts at Chivo Wallet and banks.
- Implement Additional Monitoring for High-Risk Areas: Increase monitoring of ATMs located in high-risk areas.
Educational Recommendations
- Training Opportunities for Financial Sector: Provide training opportunities to the financial sector regarding identification of red flag indicators in crypto transactions.
- Capacity Building for Public Officials: Develop programs to build the capacity of public officials to understand virtual assets (VAs) and their use in campaign financing.
- Proper Use of VAs in Campaign Financing: Provide training on the appropriate use of VAs in campaign financing.