Peru Faces FATF Scrutiny: A Mixed Bag in Compliance with International Standards

Overview of the Situation

In a recent report released by the Financial Action Task Force (FATF), Peru’s compliance with international anti-money laundering and counter-terrorism financing standards has been assessed. The evaluation, which took place in 2019, revealed a mixed picture, with some areas of strength and others where improvement is needed.

Areas of Strength

• National Cooperation and Coordination: Peru scored well in this area (R.2), demonstrating effective national cooperation and coordination.
• Confiscation and Provisional Measures: The country also performed well in confiscation and provisional measures (R.4).
• Customer Due Diligence: Peru’s rating for customer due diligence (R.10) was strong, indicating a good level of adherence to international norms.

Areas for Improvement

• Assessing Risk and Applying a Risk-Based Approach: Peru struggled with assessing risk and applying a risk-based approach (R.1), receiving a non-compliant rating.
• Implementing Targeted Financial Sanctions: The country faced challenges in implementing targeted financial sanctions related to terrorism and terrorist financing (R.6).
• Correspondent Banking: Peru’s rating for correspondent banking (R.13) was largely compliant, indicating some areas for improvement.

Key Areas of Concern

• Regulation and Supervision of Financial Institutions: Peru was rated partially compliant in this area (R.26), highlighting concerns around regulation and supervision.
• Powers of Supervisors: The country’s rating for the powers of supervisors (R.27) was also a concern.
• Regulation and Supervision of Designated Non-Financial Businesses and Professions (DNFBPs): Peru’s performance in this area (R.28) was partially compliant.

Commitment to Improvement

The FATF report highlighted several strengths, including:

• A robust legal framework for anti-money laundering and counter-terrorism financing
• Effective national cooperation and coordination
• A commitment to improving its compliance with international standards

Peru has pledged to implement necessary reforms and strengthen its regulatory frameworks. The government has also committed to enhancing transparency and beneficial ownership disclosure, as well as increasing cooperation with other countries in the region.

Conclusion

Peru’s efforts to improve its FATF ratings are crucial for maintaining its position in the global financial system and ensuring that it can continue to attract foreign investment and trade. The country’s commitment to addressing these issues will be closely monitored by the international community, and any significant improvements will likely lead to a more favorable assessment in future evaluations.