Dominican Republic

Sanctions

No

FATF AML Deficient List

No

Higher Risk

US Dept of State Money Laundering Assessment 
Not on EU White list equivalent jurisdictions
Corruption Index (Transparency International & W.G.I.)
International Narcotics Control Majors List

Medium Risk

Non - Compliance with FATF 40 + 9 Recommendations

Weakness in Government Legislation to combat Money Laundering
World Governance Indicators (Average Score)
Failed States Index (Political Issues)(Average Score)

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ANTI-MONEY LAUNDERING

 

FATF Status

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

 

Compliance with FATF Recommendations

The latest Follow-Up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in The Dominican Republic was undertaken in 2019. According to that Evaluation, The Dominican Republic was deemed Compliant for 14 and Largely Compliant for 20 of the FATF 40 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations. It was deemed Highly Effective for 0 and Substantially Effective 2 of the Effectiveness  & Technical Compliance ratings.

 

US Department of State Money Laundering assessment (INCSR)

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

OVERVIEW

 

The Dominican Republic (DR) is a major transshipment point for illicit narcotics destined for the United States and Europe.  The eight international airports, 16 seaports, and a large porous frontier with Haiti present Dominican authorities with serious challenges.  The DR is not a major regional financial center, despite having one of the largest economies in the Caribbean.

 

Corruption within the government and the private sector, the presence of international illicit trafficking cartels, a large informal economy, and weak financial controls make the DR vulnerable to money laundering threats.  Financial institutions in the DR engage in currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States.

 

Following its expulsion in 2006, the DR is not currently a member of the Egmont Group.  The Dominican government officially requested readmission to Egmont in 2015 and is working with the Egmont Group to complete reinstatement in 2019.

 

The government should take steps to rectify continuing weaknesses regarding PEPs, pass legislation to provide safe harbor protection for STR filers, and criminalize tipping off.  The government should better regulate casinos, non-bank businesses, professions, real estate companies, and betting and lottery parlors, and strengthen regulations for financial cooperatives and insurance companies. 

 

 

 

SANCTIONS

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

 

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           30

World Governance Indicator – Control of Corruption             25

 

ECONOMY

The Dominican Republic has long been viewed primarily as an exporter of sugar, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy's largest employer, due to growth in construction, tourism, and free trade zones. The mining sector has also played a greater role in the export market since late 2012 with the commencement of the extraction phase of the Pueblo Viejo Gold and Silver mine. The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP. High unemployment, a large informal sector, and underemployment remain important long-term challenges.

 

The economy is highly dependent upon the US, the destination for approximately half of exports. Remittances from the US amount to about 7% of GDP, equivalent to about a third of exports and two-thirds of tourism receipts. The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) came into force in March 2007, boosting investment and exports and reducing losses to the Asian garment industry.

 

The Dominican Republic's economy rebounded from the global recession in 2010-15, and the fiscal situation is improving. A tax reform package passed in November 2012, a reduction in government spending, and lower energy costs helped to narrow the central government budget deficit from 6.6% of GDP in 2012 to 2.6% in 2015. A liability management operation in January 2015, in which the government paid down over $4 billion of the country’s Petrocaribe debt at a discount of 52% with proceeds from the sale of $2.5 billion in global bonds, reduced the country’s debt load by approximately by 4% of GDP. Analysts project 6% GDP growth in 2016 and inflation within the Central Bank’s target of 4.0%, 1.0%, due to low oil prices, increased remittances, and continued expansion in the services sector based on growth in construction.

 

Agriculture - products:

cocoa, tobacco, sugarcane, coffee, cotton, rice, beans, potatoes, corn, bananas; cattle, pigs, dairy products, beef, eggs

Industries:

tourism, sugar processing, gold mining, textiles, cement, tobacco, electrical components, medical devices

 

Exports - commodities:

gold, silver, cocoa, sugar, coffee, tobacco, meats, consumer goods

Exports - partners:

US 42.5%, Haiti 16.5%, Canada 8.1%, India 4.8% (2015)

Imports - commodities:

petroleum, foodstuffs, cotton and fabrics, chemicals and pharmaceuticals

Imports - partners:

US 42%, China 9.2%, Venezuela 5.6%, Trinidad and Tobago 4.5%, Mexico 4.4% (2015)

Investment Climate  -  US State Department

 

Over the last few decades, the Dominican Republic has adopted policies of greater openness to international trade and investment. As a result, foreign direct investment (FDI) has played a prominent role in the country’s economic development; however, significant systemic problems remain. Foreign investors cite a lack of clear, standardized rules by which to compete and a lack of enforcement of existing rules. Complaints have included allegations of widespread corruption, requests for bribes, delays in government payments, increased time and costs necessary to enforce contracts, and non-standard procedures in customs valuation of imported goods, as well as product misclassification as a means of negating CAFTA-DR benefits and increasing customs revenues. The Dominican authorities have carried out some reform efforts aimed at improving transparency and effectiveness of laws affecting competition. Nevertheless, corruption, the need for reform, and better implementation of existing laws are openly and widely discussed as key public grievances.

 

In 2015, the Dominican economy grew an estimated 7 percent, according to the Central Bank, making it the fastest-growing country in Latin America. Growth was led by public and private sector construction, with 18.2% growth, financial services, with 9.2% growth, and by commerce, education, remittances, and increased tourism receipts. The fiscal deficit, at 1.6% of GDP in 2015, was down somewhat from the previous year. While the macroeconomic situation has stabilized, the investment climate in the coming years will largely depend on sustaining the political will to make and to implement reforms necessary to promote competitiveness, transparency, and attract further foreign investment.

According to information from the International Trade Administration (ITA), the U.S. foreign direct investment (FDI) in the Dominican Republic (stock) was USD 1.224 billion in 2015.

 

The Dominican Republic is among the main recipients of FDI in the Caribbean and Central America. The manufacturing, mining, power generation, real estate, and tourism sectors are the largest recipients of foreign direct investment. A major Canadian investment in the mining sector totaled over USD 4 billion and represents the largest FDI to date. Historically, the United States has been the largest investor, followed by Canada and Spain.

 

Country Links

Banco Central de la Republica Dominica

Superintendencia de Bancos de la Republica Dominicana

Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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