Peru Faces Challenges in Fight Against Money Laundering

Lima, Peru - Money laundering poses a significant threat to Peru’s economy, with an estimated $3.2 billion to $7.9 billion laundered annually. The country’s large informal sector, porous borders, and lack of enforcement against financial crimes contribute to this vulnerability.

The Informal Economy: A Significant Risk Factor

70% of the population is employed in the informal economy, making it a significant risk factor for money laundering.
Lack of research on the scope and challenges of the sector has hindered efforts to address it.

Mining: Another Area of Concern

Illegal mining operations are driven by poverty and lack of government oversight, contributing to nearly half of financial intelligence reports in the last decade.

Porous Borders Allow Illicit Goods and Money Transit

Peru’s porous borders make it an attractive transit point for illicit goods and money, particularly cocaine trafficking into North America and Europe.

Legislation and Regulations

To combat money laundering, Peru has implemented various laws and regulations, including:

Legislative Decree 1106: sets out the legal framework for money laundering, illegal mining, and organized crime.
Law 30737: requires reparations to the state in the case of corruption.
Law 28950: is concerned with human trafficking.
Law 22095: is concerned with drug trafficking.
Legislative Decree 1327: provides protection for corruption whistleblowers.
Legislative Decree 1372: established beneficial ownership registers.

Risks and Challenges

The cash traders, banks, and real estate sectors are seen as key channels for financial crimes and laundering cash.

Key Channels for Financial Crimes and Laundering Cash

Cash traders: allow for the exchange of large amounts of cash, making them a prime target for money launderers.
Banks: while regulated, banks can still be vulnerable to money laundering, particularly if they fail to implement effective due diligence procedures.
Real estate: the real estate sector is often used as a conduit for money laundering, with property being purchased or sold using illicit funds.

Mining: A Significant Contributor to Financial Crimes

Mining is a significant contributor to financial crimes in Peru, with illegal mining operations drawing in organized crime. The lack of government oversight and regulation makes it difficult to track and prevent these activities.

Cryptocurrency: A Growing Area of Concern

Peru is one of the top three countries in Latin America for cryptocurrency use, which presents significant money laundering challenges that the country is 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, as well as citizen participation in the fight against corruption.

Commitment to Strengthening Anti-Money Laundering Efforts

Implementing new laws and regulations: Peru has implemented various laws and regulations to combat money laundering, including Legislative Decree 1106.
Increasing transparency and information sharing: the country has committed to strengthening its anti-money laundering efforts by increasing transparency and information sharing between government agencies and financial institutions.
Citizen participation: Peru is also committed to involving citizens in the fight against corruption and money laundering.