Financial Crime World

Money Laundering Threats and Challenges in Suriname: What Businesses Need to Know

Suriname, the smallest country in South America, has gained notoriety as a hotspot for money laundering due to inherent vulnerabilities such as weak regulation, endemic corruption, and porous borders. This article provides an overview of key money laundering risks and challenges in Suriname, helping organizations evaluate customer, geographic, and matter risk.

Title: A Money Launderer’s Paradise

Businesses involved in Anti-Money Laundering (AML) compliance must understand the risks Suriname poses. Suriname, often referred to as a “money launderer’s paradise,” requires the attention of organizations performing risk assessments and client due diligence.

Key Risks

1. Poor Regulation

Suriname’s underdeveloped regulatory environment, weak institutions, and lack of implementation of laws create an ideal setting for money laundering activities. Critical financial crimes, such as the embezzlement of $200 million by the governor of the central bank and finance minister, underscore the country’s regulatory weaknesses.

  • Infamous financial crimes
  • Underdeveloped regulatory environment
  • Weak institutions and low technical capacity

2. Corruption

Corruption permeates all levels of Suriname’s government, representing the most significant financial crime affecting the country and the primary source of criminal proceeds.

  • Deeply entrenched patronage
  • Former president implicated in murder and drug trafficking
  • Convicted criminals operating with impunity

3. Drug Trafficking

Suriname serves as a crucial transit country and broker for cocaine moving from Colombia and Venezuela to Europe, particularly the Netherlands, Suriname’s former colonial power.

  • Crucial transit country for drug trafficking
  • Former head of the anti-terror unit convicted in US court for drug trafficking and funneling profits to Hezbollah

4. Mineral Trafficking

Gold smuggling, illegal logging, and timber trafficking are significant risks given endemic corruption and non-existent regulation.

  • Gold smuggling
  • Illegal logging
  • Timber trafficking
  • Mineral trafficking a significant concern
  • Tax responsibility for gold exports sold to UAE-based gold company acting as a front for money launderers

5. Porous Borders

The frontiers shared with Brazil and Guyana allow for easy smuggling of illegal gold and cocaine.

  • Easy smuggling of illegal gold and cocaine
  • Porous borders shared with Brazil and Guyana

6. Used Cars

Used cars serve as a primary means for transaction-based laundering, with cars being imported and sold to hide illicit cash.

  • Used cars a primary means for transaction-based laundering

Criminal Proceeds

An estimated $56 million to $139 million is laundered annually in Suriname, requiring enhanced AML measures and monitoring.

AML Policy Summary

Suriname has passed updated anti-corruption laws and maintains money laundering statutes. However, there is little political will to effectively address money laundering or criminality due to rampant corruption at all levels of government.

Weaknesses

1. Banking Sector

The banking sector is a significant weakness in AML efforts, with banks often prioritizing profits over compliance and lacking technical knowledge and expertise.

  • Prioritizing profits over compliance
  • Lacking technical knowledge and expertise
  • Risks isolation from the global financial system
  • Mainly cash-based economy

2. Professional Services

Lawyers, notaries, car dealers, unregulated currency exchanges, and supermarkets acting as currency dealers complicate AML efforts.

  • Professional services as primary facilitators for money laundering
  • Unregulated sectors present additional challenges
  • Carmarket and jewelry industry refused to participate in national risk assessment
  • Labelled as key channels of money laundering

3. Drug Trafficking

Drug trafficking is carried out openly through the use of container ships, small boats, and planes.

  • Drug trafficking openly carried out
  • Suriname considered a black market broker

4. Terrorist Financing

Terrorist financing remains a significant risk in Suriname, with Hezbollah using the country as a base of operations.

  • Former head of the anti-terror unit convicted for conspiring to import drugs and providing material support to Hezbollah

Strengths

Suriname did complete a national risk assessment in 2021. However, the document’s confidentiality raises questions about its implementation, as former president Desi Bouterse, a convicted murderer and drug trafficker, still holds significant influence in the new administration.

Conclusion

Suriname poses significant risks in the realm of AML compliance and money laundering, with challenges ranging from weak regulation, endemic corruption, and a cash-based economy, to drug trafficking, mineral trafficking, and terrorist financing. Organizations must be aware of these risks and closely monitor their customer, geographic, and matter risk when considering business with Suriname or entities based in the country.

For more information and advice on money laundering challenges and compliance in Suriname and other Latin American and Caribbean countries, download VinciWorks’ free AML guide which includes a country-by-country assessment of AML risks and laws, offering valuable insights for businesses operating or planning to expand in the region.