Financial Crime World

Peru Struggles with Anti-Money Laundering Efforts Amid Corruption and Illegal Activities

Background

Peru’s anti-money laundering (AML) efforts have been hindered by corruption and illegal activities, including drug trafficking, illegal mining, and an informal economy that employs nearly 70% of the population.

Challenges in Enforcement

According to a report by VinciWorks, enforcement is lacking, with investigations and prosecutions not meeting expected standards. The country’s National Plan Against Money Laundering and Terrorist Financing aims to address money laundering risks across the economy, but Peru has been criticized for its weak prosecution methods and lack of knowledge about financial crimes.

Major Risks Factors

  • Informal Economy: The informal economy is a significant risk factor for money laundering, with an estimated $3.2 billion to $7.9 billion laundered every year.
  • Illegal Mining: Illegal mining, which contributes around 10% of GDP and over 60% of exports, is another major concern, as it often involves organized crime and corruption.
  • Drug Trafficking: Drug trafficking is also a significant problem in Peru, which is the second-largest producer of cocaine in the world and a key transit point for drugs being trafficked into North America and Europe.
  • Remittances: Remittances from abroad are another key risk factor for increasing opportunities for money laundering, as they often involve cash transactions that can be difficult to trace.

Corruption Risks

The education, health, and law enforcement sectors are also at high risk for corruption due to low pay. This creates an environment where bribery and other forms of corruption can thrive, making it harder to combat money laundering and other financial crimes.

Cryptocurrency Concerns

Cryptocurrency is a growing area of concern in Peru, which is one of the top three countries in Latin America for cryptocurrency use. This presents significant money laundering challenges that the country is under-resourced to address.

Progress Made

Peru has made some progress in strengthening transparency and information sharing, and has committed to combating corruption. The country is considered broadly compliant with most of GAFILAT’s technical recommendations.

Support for Businesses

In a bid to support businesses operating in Latin America and the Caribbean, VinciWorks has created a guide that provides an overview of AML challenges and issues, as well as a country-by-country assessment of AML risks and laws.