Financial Crime World

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Peru’s Struggle with Financial Crime: Key Challenges and Strategies

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As part of its efforts to combat financial crime, Peru has implemented various measures to prevent money laundering (ML) and terrorist financing. However, despite its commitment to anti-money laundering (AML) regulations, enforcement remains a significant challenge.

Key Risks

Enforcement Challenges

  • Investigations and prosecutions failing to meet expected standards
  • Lack of effective enforcement in combating financial crime

Informal Economy Risks

  • 70% of the population employed in the informal economy before the COVID-19 pandemic
  • Significant risk of tax evasion, corruption, and money laundering

Illegal Mining and Drug Trafficking

  • Illegal mining contributes to around 10% of GDP and over 60% of exports
  • Estimated $3.2 billion to $7.9 billion laundered annually due to drug trafficking

AML Policy and Laws

Peru has a National Plan Against Money Laundering and Terrorist Financing aimed at addressing ML risks across the economy. Key AML laws include:

Legislative Decree 1106

  • Sets out the legal framework for ML, illegal mining, and organized crime

Law Decree 25475

  • Regulates terrorist financing prevention methods

Legislative Decree 1327

  • Provides protection for corruption whistleblowers

Weaknesses

Cash Traders, Banks, and Real Estate

  • Key channels for financial crimes and laundering cash

Mining and Illegal Activities

  • Mining operations drawing in organized crime
  • Remittances from abroad pose a risk factor for ML

Public Financed Projects and Government Assistance

  • Susceptible to ML and corruption due to lack of transparency
  • Education, health, and law enforcement sectors at high risk for corruption

Cryptocurrency

  • Growing area of concern in Peru
  • Presents significant ML challenges that the country is under-resourced to address

Strengths

Compliance with GAFILAT Recommendations

  • Peru considered broadly compliant with most technical recommendations

Commitment to Strengthening Transparency and Information Sharing

  • Country has committed to strengthening transparency, information sharing, and citizen participation in the fight against corruption