Financial Crime World

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Types of Financial Crimes in Peru: Understanding the Risks and Challenges

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Peru has been grappling with financial crimes, including money laundering, corruption, and illegal activities. To better understand the risks and challenges associated with these crimes, it’s essential to comprehend the country’s unique situation.

Key Types of Financial Crimes in Peru

1. Enforcement

Despite having a robust commitment to anti-money laundering (AML) efforts, Peru has struggled with enforcement, with investigations and prosecutions not meeting expected standards.

2. Informal Economy

The informal sector employs around 70% of the population, making it vulnerable to tax evasion, corruption, and money laundering.

3. Illegal Mining

Peru is a significant producer of copper, zinc, gold, and other precious metals, but illegal mining activities driven by poverty and lack of government oversight pose a significant risk for money laundering and corruption.

4. Drug Trafficking

As the second-largest producer of cocaine in the world, Peru serves as a key transit point for drugs being trafficked into North America and Europe.

5. Porous Borders

Peru’s long and porous borders allow illegal goods and cash to easily cross the border, making it challenging to track and prevent financial crimes.

Criminal Proceeds

An estimated $3.2 billion to $7.9 billion is laundered annually in Peru, highlighting the scale of the problem.

AML Policy Summary

Peru has a National Plan Against Money Laundering and Terrorist Financing aimed at addressing money laundering risks across the economy. However, corruption and lack of knowledge are significant challenges, with prosecution efforts falling short.

Peru’s main anti-money laundering laws include:

  • Legislative Decree 1106: Outlines the legal framework for money laundering, illegal mining, and organized crime.
  • Law Decree 25475: Regulates terrorist financing prevention methods.
  • Law 30737: Requires reparations to the state in cases of corruption.
  • Law 28950: Concerned with human trafficking.
  • Law 22095: Concerned with drug trafficking.
  • Legislative Decree 1327: Provides protection for corruption whistleblowers.
  • Legislative Decree 1372: Established beneficial ownership registers.

Weaknesses

Cash traders, banks, and real estate are seen as key channels for financial crimes and cash laundering. Mining activities, remittances from abroad, and the informal economy also pose significant risks. Additionally, insufficient knowledge of financial crime and resources for supervisory authorities and law enforcement make it challenging to tackle these issues.

  • Public financed projects, government assistance to vulnerable populations, and political campaigning are also susceptible to money laundering and corruption.
  • The education, health, and law enforcement sectors are particularly vulnerable due to low pay.
  • Cryptocurrency is a growing concern in Peru, with the country ranking among the top three countries in Latin America for cryptocurrency use, presenting significant money laundering challenges that are under-resourced to address.

Strengths

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

For more information on AML risks and laws in Peru, download VinciWorks’ free guide to compliance for Latin America and the Caribbean.