Financial Crime World

Peru’s Financial Action Task Force (FATF) Compliance Report 2020: Mixed Results

Peru has made significant progress in implementing the technical requirements of the FATF Recommendations, but still faces challenges in several areas. This report highlights Peru’s strengths and weaknesses in various aspects of anti-money laundering (AML) and combating terrorist financing (CTF).

Progress Made

National Cooperation and Coordination

Peru scored highest in national cooperation and coordination, indicating a strong collaborative effort among government agencies to combat money laundering.

Regulation and Supervision of Financial Institutions

The country also performed well in regulating and supervising financial institutions, with measures in place to ensure compliance with AML/CTF standards.

Challenges Remain

Laws on Confiscation and Provisional Measures

Peru received lower ratings for its laws on confiscation and provisional measures, which are not considered sufficient to combat money laundering. Critics argue that these laws need to be strengthened to effectively prevent illicit activities.

Customer Due Diligence

The country struggled with implementing effective customer due diligence measures, particularly when it comes to non-profit organizations. This highlights the need for Peru to improve its AML/CTF framework and ensure that all sectors are adequately covered.

Additional Concerns

Targeting Terrorist Financing and Proliferation

While Peru’s efforts in targeting terrorist financing and proliferation have been praised, more work is needed to prevent the misuse of wire transfers for illicit activities. The country must enhance its AML/CTF measures to address this concern.

Relying on Third-Party Service Providers

Peru faces challenges in relying on third-party service providers and ensuring transparency in beneficial ownership. This requires improvement in the country’s internal controls and foreign branches and subsidiaries.

Key Findings

  • National cooperation and coordination: Compliant
  • Regulation and supervision of financial institutions: Largely compliant
  • Laws on confiscation and provisional measures: Non-compliant
  • Customer due diligence: Largely compliant
  • Targeting terrorist financing and proliferation: Largely compliant
  • Preventing misuse of wire transfers: Non-compliant
  • Relying on third-party service providers: Partially compliant
  • Transparency in beneficial ownership: Largely compliant

Recommendations

  1. Strengthen laws on confiscation and provisional measures: Peru should prioritize improving its laws to combat money laundering more effectively.
  2. Enhance customer due diligence: The country needs to improve its AML/CTF measures, particularly for non-profit organizations.
  3. Prevent misuse of wire transfers: Peru must enhance its efforts to prevent the misuse of wire transfers for illicit activities.
  4. Strengthen reliance on third-party service providers and ensure transparency in beneficial ownership: The country should improve its internal controls and foreign branches and subsidiaries, as well as ensure transparency in beneficial ownership.

Peru has committed to addressing these concerns and is working to improve its compliance with FATF standards. However, more effort is needed to ensure that Peru’s financial system is adequately protected against money laundering and terrorist financing.