PERU
Summary
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Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

Not on EU White list equivalent jurisdictions

International Narcotics Control Majors List

Medium Risk Areas

 

Compliance with FATF 40 + 9 recommendations

US Dept of State Money Laundering assessment

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 was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Peru is neither a major regional financial center nor an offshore financial center. Peru remains one of the world’s top producers of cocaine. Money laundering is often used as a tool to integrate significant illegal earnings from drug trafficking and other transnational organized criminal activity into the Peruvian economy. As the Peruvian economy grows, financial crimes also increase. The most common methods of money laundering in Peru are believed to be illegal mining, the illicit gold trade, illegal logging, real estate sales, casinos, business investments, high-interest loans, construction, export businesses, money exchange, and investments in hotels and restaurants. Other factors which facilitate money laundering include Peru’s cash-based and heavily-dollarized economy, a large informal sector (estimated to be 70 percent of GDP), and deficient regulatory supervision of designated non-financial businesses and professions (DNFBPs), such as informal money exchanges and wire transfer services.

A large black market for pirated and smuggled goods exists, exacerbated by cash transactions. Pervasive corruption remains an issue of serious concern in Peru. There are reports that illicit funds may make up 3.5 percent of Peru’s GDP.

 

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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 – 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 “the third-fastest growing consumer market globally, and set to be a bigger economy than Chile, Colombia, or even South Africa in the long term.”

The steady economic growth began with the pro-market policies enacted by former President Alberto Fujimori in the 1990’s. 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 nation’s socioeconomic gap, President Humala has increased social spending and raised taxes on mining companies.

Peru’s currency, the “Nuevo Sol” (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-1990’s, the Sol’s 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.