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Bolivia Country Summary

70 Country Rating /100
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Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

Bolivia is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  21 June 2013

The FATF welcomes Bolivia’s significant progress in improving its AML/CFT regime and notes that Bolivia has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Bolivia is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Bolivia will work with GAFISUD as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bolivia was undertaken in 2023. According to that Evaluation, Bolivia was deemed Compliant for 12 and Largely Compliant for 16 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 1 of the Effectiveness ratings.

US Department of State Money Laundering assessment (INCSR)

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

Overview

Bolivia is not a regional financial center but remains vulnerable to money laundering.  Criminal proceeds laundered in Bolivia are derived primarily from smuggling contraband and the drug trade.  In recent years, Bolivia has enacted several laws and regulations that, taken together, should help the country more actively fight money laundering.  Bolivia would benefit from continued implementation of its laws and regulations with the goal of identifying criminal activity that results in investigations, criminal prosecutions, and convictions. 

Sanctions

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

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           29

World Governance Indicator – Control of Corruption             21

Corruption is a significant obstacle to business in Bolivia. Large networks of patronage and clientelism permeate several sectors of the economy, including public procurement and the natural resource industries. The Bolivian Penal Code and the Law against Corruption, Illicit Enrichment, and the Investigation of Assets (in Spanish) comprise the legal anti-corruption framework of the country and criminalize most corruption offences, including active and passive bribery, the bribery of foreign officials, extortion and abuse of office. Nonetheless, anti-corruption laws are poorly enforced, and impunity among government officials and public servants is a problem. Bribery is widespread in almost all sectors of the economy. For further information - GAN Integrity Business Anti-Corruption Portal

Economy

Bolivia’s 2009 constitution nationalized companies in “strategic” sectors, including extractive industries like fossil fuels and mining, telecommunications, and electricity.  The Movement Towards Socialism (MAS) government of President Luis Arce favors nationalization and an “import substitution model” for its statist economic model.   There is no significant foreign direct investment (FDI) from the United States in Bolivia, and there are no specific incentives to encourage U.S. investment.  Bolivia abrogated its Bilateral Investment Treaty (BIT) with the United States in 2012 and has not sought a positive bilateral economic and commercial relationship.

Enforcement of laws regarding dispute settlements, intellectual property, and real property are lacking, creating legal discrepancies and inconsistent enforcement, and therefore, an uncertain investment climate. Furthermore, Bolivia’s judicial system is increasingly compromised, making judicial recourse for investment disputes challenging. Bolivia’s weak judicial security, complicated regulatory systems, cumbersome bureaucratic procedures, and corruption adversely affect the private sector and impede investment in Bolivia.

Bolivia is a state-run economy focused on public spending. Many state-owned enterprises are inefficiently managed, and the economy is fragile and vulnerable to external shocks. Central bank reserves are low, and the public debt is high. Bolivia’s inflation rate is the lowest in the region at around 3 percent, but the economy is cushioned by a fixed exchange rate, government subsidies, and rampant contraband from Argentina, Brazil, Peru, and Chile. Multiple rating agencies downgraded Bolivia in March 2023 due to its low reserves and the government’s poor fiscal policies. As a result, speculation has led to dollar scarcity in the formal financial system, placing pressure on the foreign exchange rate. A black market has emerged for dollars at an exchange rate surpassing the legal peg. Banks are facing liquidity issues and have limited cash withdrawals.

Among the leading sectors in Bolivia are energy (mainly fossil fuels), which is Bolivia’s historical main revenue source. However, for the first time in 20 years, Bolivia has become a net importer of fuel and has struggled to meet its commitments for natural gas exports. Gas price increases, partly due to Russia’s war against Ukraine, and a decrease in Bolivia’s production and investment in exploration, are factors. Bolivia also maintains extremely high fuel subsidies which, along with certain food subsidies, help keep consumer prices low, but at a significant fiscal cost. In 2022, more than half of Bolivia’s fiscal deficit stemmed from fuel subsidies alone.

Other key sectors for investment include environmental technologies, automotive, healthcare technologies, and the food and agriculture value chain. Agriculture is a growing sector in Bolivia, with 2022 exports increasing by 27 percent from 2021 and more than doubling since 2020. Nonetheless, droughts, floods, and other climate phenomena in recent years have been devastating in Bolivia and advanced equipment and technology is limited. Manufacturing is also experiencing growth, particularly with foods, oilseeds, chemicals related to urea and lithium derivatives, and basic metals for tin production.
Children in Bolivia are subjected to the worst forms of child labor particularly in mining and agricultural industries.  In 2021, Bolivia made minimal advancement in efforts to eliminate the worst forms of child labor, according to the U.S. Department of Labor.

 

Country Links

Central Bank of Bolivia

Autoridad de Supervisión del Sistema Financiero

Unidad de Investigaciones Financieras (UIF )

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