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Compliance Risks in Finance in Peru: Understanding the Challenges

In Latin America and the Caribbean, understanding the risks and responsibilities associated with money laundering is crucial for financial institutions operating in the region. In this article, VinciWorks examines the key Anti-Money Laundering (AML) challenges and laws in Peru, and what organizations should consider when assessing customer, geographic or matter risk.

AML Challenges in Peru

Despite a robust commitment to AML, Peru’s enforcement remains lacking, with investigations and prosecutions not meeting expected standards. The country’s informal economy, which employs around 70% of the population, poses significant risks of:

  • Tax evasion
  • Corruption
  • Money laundering

Additionally, illegal mining activities, driven by poverty and lack of government oversight, contribute to a substantial portion of the economy and present a significant risk for money laundering and corruption.

Peru’s Role in Global Drug Trafficking

Peru is also a key transit point for drugs being trafficked into North America and Europe, and its porous borders allow for illegal goods and money to pass through. An estimated $3.2 billion to $7.9 billion is laundered every year in Peru, highlighting the need for effective AML measures.

National Plan Against Money Laundering and Terrorist Financing

The National Plan Against Money Laundering and Terrorist Financing aims to address money laundering risks across the economy. The main money laundering laws in Peru include:

  • Legislative Decree 1106
  • Law Decree 25475
  • Others that regulate terrorist financing prevention methods, corruption, human trafficking, drug trafficking, and beneficial ownership registers

Weaknesses Remain

Despite these measures, weaknesses remain in Peru’s AML regime. Key channels for financial crimes include:

  • Cash traders
  • Banks
  • Real estate

Mining operations often draw in organized crime, while remittances from abroad and the informal economy pose significant risks for money laundering.

Public financed projects, government assistance to vulnerable populations, and political campaigning are also susceptible to money laundering and corruption.

Cryptocurrency Concerns

Cryptocurrency is a growing area of concern, with Peru being one of the top three countries in Latin America for cryptocurrency use. However, the country lacks resources to address these challenges.

Strengthening Transparency and Information Sharing

On the other hand, Peru is considered broadly compliant with most of GAFILAT’s technical recommendations and has committed to strengthening transparency, information sharing, and citizen participation in the fight against corruption.

Additional Resources

For more information on AML compliance risks and laws in Latin America and the Caribbean, VinciWorks offers a free guide designed to support businesses operating or planning to operate in the region. The guide provides an overview of key AML challenges and issues, as well as a country-by-country assessment of AML risks and laws. Click here to download a free copy.

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