Guatemala

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.)
World Governance Indicators (Average Score)
International Narcotics Control Majors List
Offshore Finance Centre
Compliance of OECD Global Forum’s information exchange standard

Medium Risk

Non - Compliance with FATF 40 + 9 Recommendations
Weakness in Government Legislation to combat Money Laundering
Failed States Index (Political Issues)(Average Score)

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ANTI-MONEY LAUNDERING

 

FATF Status

Guatemala 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 follow-up relating to the implementation of anti-money laundering and counter-terrorist financing standards in Guatemala was undertaken in 2018. According to that Evaluation, Guatemala was deemed Compliant for 16 and Largely Compliant for 15 of the FATF 40 Recommendations.​ It was deemed Highly effective for 0 and Substantially Effective for 4 of the Effectiveness  & Technical Compliance ratings.

 

US Department of State Money Laundering assessment (INCSR)

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

OVERVIEW

 

Guatemala is a transshipment route for narcotics to the United States and cash returning to South America.  Though the government has challenges in addressing money laundering and financial crimes related to narcotics trafficking, they have seen improvements.  Guatemala continues to progress in investigating and prosecuting corruption, money laundering, and other financial crimes.  The Public Ministry (MP) has improved coordination between prosecutors and agencies so that predicate crimes, such as extortion, corruption, and drug trafficking, are pursued as part of money laundering investigations.

 

Issues to be addressed include greater communications between the Special Verification Agency (IVE), Guatemala’s FIU, and the MP; improved coordination among financial supervision entities, including various parts of the Superintendent of Banking; and institutionalization of coordination between the MP and the National Secretariat for Administration of Forfeited Property (SENABED), the entity in charge of seized asset administration.  Additional challenges include continued development of internal capacity for financial crime investigations at the MP; enhancement of a dedicated unit of investigators within the National Civil Police to support the MP; greater autonomy for SENABED; and insufficient staffing of key agencies.

 

In order to maximize effectiveness and decrease inefficiencies in addressing money laundering, Guatemala should continue to use vetting and counter-corruption mechanisms to identify and eliminate actors in the legal system who hinder trust and communication within and among relevant agencies.

 

SANCTIONS

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

 

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           27

World Governance Indicator – Control of Corruption             24

Corruption represents a major obstacle for businesses operating or planning to invest in Guatemala. Businesses must contend with high risks in almost all sectors. The Penal Code (in Spanish) criminalizes passive and active bribery, the bribery of foreign officials, embezzlement and extortion. The government generally implements the relevant laws effectively. However, government officials engage in corruption with impunity, and recent years have witnessed several corruption cases, the biggest of which ended in the impeachment and imprisonment of former President Otto Pérez Molina. Facilitation payments are prohibited by law. Bribery and gifts are a widespread practice in Guatemala. For further information - GAN Integrity Business Anti-Corruption Portal

 

ECONOMY

Guatemala is the most populous country in Central America with a GDP per capita roughly half the average for Latin America and the Caribbean. The agricultural sector accounts for 13.6% of GDP and 31% of the labour force; key agricultural exports include sugar, coffee, bananas, and vegetables. Guatemala is the top remittance recipient in Central America as a result of Guatemala's large expatriate community in the US. These inflows are a primary source of foreign income, equivalent to over one-half of the country's exports or one-tenth of its GDP.

 

The 1996 peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, and since then Guatemala has pursued important reforms and macroeconomic stabilization. The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) entered into force in July 2006, spurring increased investment and diversification of exports, with the largest increases in ethanol and non-traditional agricultural exports. While CAFTA-DR has helped improve the investment climate, concerns over security, the lack of skilled workers, and poor infrastructure continue to hamper foreign direct investment.

 

The distribution of income remains highly unequal with the richest 20% of the population accounting for more than 51% of Guatemala's overall consumption. More than half of the population is below the national poverty line, and 23% of the population lives in extreme poverty. Poverty among indigenous groups, which make up more than 40% of the population, averages 79%, with 39.8% of the indigenous population living in extreme poverty. Nearly one-half of Guatemala's children under age five are chronically malnourished, one of the highest malnutrition rates in the world.

 

Guatemala is facing growing fiscal pressures exacerbated by multiple corruption scandals in 2015 that led to the resignation of the president, vice president, and numerous high-level economic officials.

 

Agriculture - products:

sugarcane, corn, bananas, coffee, beans, cardamom; cattle, sheep, pigs, chickens

Industries:

sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber, tourism

Exports - commodities:

sugar, coffee, petroleum, apparel, bananas, fruits and vegetables, cardamom, manufacturing products, precious stones and metals, electricity

Exports - partners:

US 34.9%, El Salvador 8.4%, Honduras 7.3%, Nicaragua 5%, Canada 4.6%, Mexico 4.3%, Costa Rica 4.1% (2015)

Imports - commodities:

fuels, machinery and transport equipment, construction materials, grain, fertilizers, electricity, mineral products, chemical products, plastic materials and products

Imports - partners:

US 38.3%, China 13.4%, Mexico 11.8%, El Salvador 4.9% (2015)

Investment Climate  -  US State Department

 

Guatemala has the largest economy in Central America, with a USD 63.9 billion gross domestic product (GDP) in 2015, and an estimated 4.1 percent growth rate in 2015. Remittances, mostly from the United States, increased by 13.4 percent in 2015 and were equivalent to 9.8 percent of GDP. The United States is Guatemala’s most important economic partner. The Guatemalan government (GoG) continues to enhance competitiveness, promote investment opportunities, and work on legislative reforms aimed at supporting economic growth. More than 200 U.S. and other foreign firms have active investments in Guatemala, benefitting from the U.S. Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). Foreign direct investment (FDI) stock was USD 13.184 billion in 2015, a 10 percent increase in relation to 2014. Some of the activities that attracted most of the FDI flows in the last three years were electricity, agriculture, mining, commerce, and manufacturing.

 

Despite positive steps to improve Guatemala’s investment climate, international companies choosing to invest in Guatemala face significant challenges. Complex and confusing laws and regulations, inconsistent judicial decisions, bureaucratic impediments, and corruption continue to constitute practical barriers to investment. Under CAFTA-DR obligations, the United States has raised concerns with the GoG regarding its enforcement of both its labor and environmental laws.

 

Since 2006, the UN-sponsored International Commission against Impunity in Guatemala (CICIG) has undertaken numerous high-profile official corruption investigations, leading to significant indictments. CICIG has gained private sector praise and the endorsement of the private sector for a rash of high-profile investigations uncovering official corruption in 2015, particularly a case revealing a customs corruption scheme, which led to the resignations of the president and vice president.

 

Guatemala held national elections in 2015 amid 19 weeks of anti-corruption protests that culminated in the establishment of an interim government in September. President Jimmy Morales (National Convergence Front, FCN) took office January 14, 2016, along with a new Congress of mostly freshman members and locally elected officials. These newly elected officials enter a changed geopolitical landscape in Guatemala, with a lower tolerance for corruption and lingering citizen demands for widespread government reform and improved efficiency. The presidents of El Salvador, Guatemala, and Honduras, and the Vice President of the United States, Joe Biden agreed to specific commitments in a joint statement to the support of the Alliance for Prosperity on February 24, 2016, including measures to ensure more accountable, transparent, and effective public institutions.

 

Country Links
Bank of Guatemala
Superintendencia de Bancos 
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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