Guatemala City — Money laundering is a growing threat and the United Nations (UN) reported that this crime currently represents a waste of up to 2.7% of the world’s GDP each year, and the countries of Central America are not spared from this phenomenon.
In August 2022, the XLV Plenary and Working Groups of the Plenary of Representatives of the Financial Action Task Force of Latin America (GAFILAT) took place, where the new international guidelines on the prevention of money laundering were discussed, focusing on best practices that allow for a strengthening of anti-laundering practices in the region.
During the meeting, the representatives revealed that Guatemala complies with 16 of 40 international recommendations, but runs the risk of being included along with Panama and Nicaragua in the group of countries with intensified monitoring and would fall into the gray list.
In the latest ranking (2021) of the Basel Institute on the vulnerability of a territory to money laundering worldwide, Panama was ranked 29th, Honduras was 43rd, while Guatemala was ranked 59th.
In the case of Guatemala, the banking industry’s watchdog for money laundering, the IVE, reported that from January to December 16 of last year, 5,376 suspicious transactions were reported.
As a result, 235 complaints were filed and expanded to follow up on those cases, and the amount reported amounted to 3.87 billion quetzals, around $494.03 million.
Amounts captured through extortion
The report Extortion in the Northern Triangle of Central America: Following the Money quantifies that the profits received by criminal organizations dedicated to money laundering in Guatemala range from $40 million - as a low estimate - to $57 million annually
The document prepared by the Washington, DC-based organization Global Financial Integrity (GFI), and presented last September, states that the figure could be even higher, due to the limited availability of information, and that part of the profits received by criminal groups could be used to pay salaries, investments, expansion of company operations and the creation of new businesses, affecting an estimated 78,000 people, equivalent to 38% of the population.
For El Salvador, GFI calculated criminal profits of between $190 million and $245 million, and for Honduras between $30 million and $50 million annually, which impacts some 330,000 people who are victims of extortion in the region.
One of the report’s conclusions is that extortion stems from financial crimes such as money laundering, terrorism financing and corruption.
Tougher public policies
Bloomberg Línea spoke with René Salazar, head of banking solutions at Fiserv Latam about the challenges for countries in the region to implement actions to prevent money laundering.
Bloomberg Línea: What effects does this type of practice have on countries?
René Salazar: These types of practices generate a climate of business and institutional distrust of the authorities.
What have entities in the region done to strengthen their systems?
We understand that money laundering is a conflict that interrupts the cycles of economic health in financial and banking markets. As a result, financial institutions have left behind traditional methods to adopt a more efficient and autonomous approach focused on technology to prevent, detect and mitigate criminal activity in real time.
How does an unusual transaction differ from a suspicious one?
An unusual transaction is a transaction that is unrelated to the customer’s economic activity or outside the additional parameters set by the entity, while a suspicious transaction is a customer’s unusual movements.
How can this perception be improved?
With tougher public policies but, above all, with the adoption of technologies to reduce money laundering that combine an architecture, analysis and investigation tools to identify if any crime occurs through automated monitoring of activity in a financial institution.
AML Risk Manager is one of the leading global solutions for money laundering mitigation and detection. It is approved as a leading product by financial consulting firms such as The Chartis Group.
With this, entities can provide greater certainty and security to their clients and, in the eyes of public opinion, contribute to improving the country’s image worldwide.
Investors pay attention to the issue of money laundering, how do the countries in which they are looking to invest handle it?
Investors look for countries that are not on ‘gray lists’. or that have measures in place to protect against this type of crimes. So, we have seen that more banks and financial institutions in countries like Guatemala, Mexico and Colombia are choosing to invest in technological innovations to mitigate money laundering. With this, they have more options to provide certainty and confidence to their customers, investors and public opinion in general.