Q24N – The housing market, casinos, concert halls, and the livestock sector are all used to launder money in Central American countries.
Excerpted from the report “International Narcotics Control Strategy Report, Volume II, Money Laundering and Financial Crimes” by the US State Department:
Weak governmental institutions, deficiencies in the rule of law, and concerns about corruption should be addressed. The Nicaraguan legal framework should also continue to be strengthened by considering identity falsification, counterfeiting, and piracy as predicate offenses for money laundering. Without this classification, apprehended criminals using these means explicitly to launder money can be tried for lesser crimes, and are not strongly deterred from continuing laundering activities.
Transnational criminal organizations continue to favor Costa Rica as a base to commit financial crimes due to its location and limited enforcement capability. Costa Rica’s government has attempted to strengthen the legal framework for supervision and enforcement; however, challenges remain in mitigating money laundering risks.
Costa Rica is a transit point that is also increasingly used as an operations base for narcotics trafficking; and significant laundering of proceeds from illicit activities continues. Costa Rica should continue to close financial crimes legislative gaps and allocate resources for investigation and prosecution.
Narcotics trafficking proceeds represent the largest source of laundered assets. Human trafficking, financial fraud, corruption, and contraband smuggling also generate illicit revenue. The construction industry; MVTS, including money remitters; the casino industry; and real estate have been identified as vulnerable to exploitation
El Salvador is a major transit route for South American cocaine destined for the United States, as well as cash proceeds returning to South America. The lack of supervision of DNFBPs and an independent FIU are key challenges to mitigating El Salvador’s money laundering vulnerabilities.
The current FIU within the Attorney General’s Office (AGO) cannot capitalize on regional information sharing or fully investigate/prosecute complex money laundering cases. While the FIU is not currently subject to political manipulation, the unit has been compromised by previous attorneys general and remains structurally vulnerable to manipulation in the future.
According to authorities, organized crime groups launder money through the use of banks, front companies, parking lots, travel agencies, remittances, the import and export of goods, and cargo transportation
Deficiency. The Superintendent of the Financial System supervises only those accountants and auditors with a relationship with a bank or bank holder
Guatemala continues to be a transshipment route for South American cocaine and heroin destined for the United States, and for cash returning to South America. Smuggling of synthetic drug precursors is also a problem. Reports suggest the narcotics trade is increasingly linked to arms trafficking. Guatemala continues incremental progress in its ability to investigate and prosecute money laundering and other financial crimes, with a key agency beginning to provide technical assistance to other nations.
However, there remain vulnerabilities due to a lack of complete coordination by the Public Ministry (PM) prosecutors, and the tendency of the jurisdiction to treat money laundering as a stand-alone crime, rather than coordinating money laundering cases with those involving extortion, corruption, or trafficking
Money is most notably laundered through real estate transactions, ranching, the concert business, and the gaming industry. It is also laundered through serial small transactions below the $10,000 reporting requirement, either in small banks along the Guatemala-Mexico border, or by travelers carrying cash to other countries.
Detected weaknesses include DNFBPs such as notaries, attorneys, and casinos or video lotteries, as being at high risk for serving as money laundering vehicles
The country’s lack of resources and capacity to effectively and efficiently investigate and analyze complex financial transactions, when combined with wide-scale corruption within the law enforcement and judicial sectors, contribute to a favorable climate for significant money laundering.
Although Honduras has developed a national AML strategy, Honduras needs to implement a risk-based approach and must focus on effectively and efficiently implementing its AML regime. Honduras is taking steps to implement a new risk-based approach. It has conducted a national risk assessment with the assistance of an international donor.
The government should make the national risk assessment public. The government has begun to work on creating a degree program, in coordination with a Honduran university, on money laundering and counter-terrorist financing.
Panama’s strategic geographic location; dollarized economy; status as a regional financial, trade, and logistics hub; and favorable corporate and tax laws make it an attractive location for money launderers. Panama passed comprehensive AML legal reforms in 2015, but it must demonstrate its ability to effectively implement these reforms, including by investigating and successfully prosecuting complex money laundering schemes.
Money laundered in Panama primarily comes from drug trafficking proceeds due to its location along major trafficking routes. Numerous factors hinder the fight against money laundering, including the need for increased collaboration among government agencies, inexperience with money laundering investigations and prosecutions, tipping off of criminals, inconsistent enforcement of laws and regulations, corruption, and an under-resourced judicial system.
Criminals launder money via bulk cash smuggling and trade at airports, seaports, and the FTZs, and through shell companies, which exploit regulatory gaps. Criminals also use the formal banking system to hide and move the proceeds of illicit activity.
See full report “International Narcotics Control Strategy Report, Volume II, Money Laundering and Financial Crimes” (March 2017) by the US Department of State.