PERU
Summary
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Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

US Dept of State Money Laundering assessment

Not on EU White list equivalent jurisdictions

International Narcotics Control Majors List

Medium Risk Areas

 

Compliance with FATF 40 + 9 recommendations

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Peru is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Peru was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Peru was deemed Compliant for 10 and Largely Compliant for 14 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 4 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Peru is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

OVERVIEW

 

Peru made progress implementing its ďNational Plan to Combat Money Laundering and Terrorist FinancingĒ in 2016, including significant regulatory and legislative advances to strengthen the AML regime. The administration passed legislation that improves access to bank and tax information for the FIU, establishes greater control over reporting entities, and enables money- laundering cases to be tried absent proof of a predicate crime.

 

The new government also made administrative changes that may reduce Peruís capacity to address money laundering crimes. The independent asset forfeiture agency was absorbed into the Ministry of Justice (MOJ), potentially limiting operational autonomy and effectiveness. The AML/CFT Working Group (CONTRALAFT) also was moved to the MOJ. Organizational structures and key officials of both entities have yet to be determined.

 

Peru must build prosecutorial and judicial capacity to improve its woeful track record on prosecutions and convictions. Capacity development should include the conduct of investigations, investigative and intelligence reporting for prosecutors, case development by prosecutors, case presentation at trial, and judicial money laundering awareness. These efforts should be complemented by improved information sharing and case development across agencies and branches of government.

 

Peruís AML agencies also must increase their focus on non-traditional avenues through which narcotics and transnational crime revenues are laundered, including illegally mined gold, timber, and counterfeit goods.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

 

Illegal gold mining, illegal logging, and counterfeiting are closely tied to the narcotics industry, and revenue from these sources is subject to the same or similar laundering techniques as narcotics revenue. Of increasing concern is the use of illegally mined gold as a medium for money laundering, given the risk it poses to the integrity of the U.S. regime. Gold purchased using narcotics revenue is imported into the United States with little oversight as gold is not a negotiable financial instrument. The FIU identified at least $4.4 billion in suspicious revenue associated with illegal mining over the last decade. The illegal gold trade in Peru is worth $2.6 billion per year.

 

Money is laundered via formal financial institutions, money-transfers, notaries, casinos, currency exchanges, and trade in goods, including counterfeit goods. Endemic corruption hampers investigations and prosecutions of narcotics-related money laundering crimes. Judicial corruption can halt progress of cases. Political figures and legislators have been implicated in money laundering, creating an impediment to progress on reform. Corruption within the police force constrains investigations.

 

Casinos remain an area of money laundering concern as the FIU cannot directly monitor or investigate casinos independent of the supervising authority, the Ministry of Trade & Tourism (MINCETUR). MINCETUR provides information to the FIU and requires casinos to report suspicious transactions.

 

Informal remittance businesses, including travel agencies and small wire transfer businesses, remain unsupervised and vulnerable to money laundering. Peru would benefit from expanded supervision and regulation of financial institutions and DNFBPs; however, the FIU needs additional resources to deal with its monitoring responsibilities.

 

KEY AML LAWS AND REGULATIONS

 

Peru has a robust legislative and regulatory framework for AML and the opportunity for the executive to legislate to resolve current deficiencies.

 

Peru is a member of GAFILAT.

 

AML DEFICIENCIES

 

Peruís national plan aims to strengthen its AML regime in line with GAFILAT recommendations. Peru receives technical assistance from various donors. Peru still must address several deficiencies, with specific focus on the high level of informal business activity.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

Advances in Peruís AML regime and investigative capacity have not resulted in increased prosecutions or convictions. Peru has convicted only 21 people of money laundering, with no verified convictions in 2016. There are insufficient prosecutors and even the money laundering Prosecutorís Office lacks capacity to develop and plead cases, especially as Peru moves to a new accusatory legal system.

 

The present restrictive requirement for the FIU to report suspicious activity solely to prosecutors hampers the ability of police to investigate. All investigations require a financial audit by the police or prosecutors, yet neither entity has enough capable accountants. A lack of prosecutors is compounded by the legal requirement for a prosecutor to accompany police to review potential asset seizures. Staff shortages at the registry agency mean many properties remain unregistered, limiting asset seizures.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

35

World Governance Indicator Ė Control of Corruption

32

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Peru has been one of the fastest growing Latin American economies for the past ten years. Since 2002 the Peruvian economy has grown by an average of 6% per year, a trend forecasted to continue in 2014 at 5.5%, twice the regional average. Consumption and private investment are the main driving forces of this growth. Investment grew by 8.3% to a value of $33.5 billion in 2013. The Ministry of Economy and Finance has sent a target of 30% growth in public investment, and has pledged a total of $30 billion over the next five years to address to infrastructure gap. As the economy has grown, poverty in Peru has steadily decreased. HSBC describes Peru as ďthe third-fastest growing consumer market globally, and set to be a bigger economy than Chile, Colombia, or even South Africa in the long term.Ē

The steady economic growth began with the pro-market policies enacted by former President Alberto Fujimori in the 1990ís. Al subsequent governments have continued these policies, including the current administration inaugurated in July 2011 for a five-year term. President Ollanta Humala pledged to encourage private and public investment in infrastructure projects in transportation, telecommunications, energy, sanitation, airports, and ports. Congruent with his other campaign goals to reduce poverty and narrow the nationís socioeconomic gap, President Humala has increased social spending and raised taxes on mining companies.

Peruís currency, the ďNuevo SolĒ (Sol), has been the least volatile of all Latin American currencies in the past few years, and was the least impacted by the downturn of the U.S. dollar. Since the mid-1990ís, the Solís exchange rate with the U.S. dollar has fluctuated between 1.25 to 3.55 to U.S. $1. The exchange rate, as of April 28 2014, was 2.79 Soles per U.S. $1.

The Peruvian Government has encouraged integration with the global economy by signing a number of free trade agreements, including the United States-Peru Trade Promotion Agreement, which entered into force in 2009. In 2013, trade between the United States and Peru doubled from $9.1 billion to $18.2 billion. From 2009 to 2013, Peruvian exports to the United States jumped from $4.2 billion to $8.1 billion (1 93% increase) while U.S. exports to Peru jumped from $4.9 billion to $10.1 billion (1 106% increase). Peru has preferential trade agreements with 49 countries and unions, including the United States, Argentina, Brazil, Uruguay, Paraguay, Bolivia, Colombia, Ecuador, Canada, Chile, China, Mexico, Japan, Singapore, South Korea, Norway, Iceland, Liechtenstein, Switzerland, Thailand, Panama, and the European Union.

In its Doing Business 2013 publication, the World Bank ranked Peru 42nd among 189 countries surveyed in terms of ease of doing business. The report rates the ease of processes like starting a business, dealing with construction permits, registering property, and obtaining credit.