FATF AML Deficiency List
US Dept of State Money Laundering assessment
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Offshore Finance Center
International Narcotics Control Majors List
Weakness in Government Legislation to combat Money Laundering
Non - Compliance with FATF MER Recommendations
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.
Guatemala remains a key transit route for narcotics to the United States and cash returning to South America. The government has challenges combating corruption, money laundering and financial crimes related to narcotics trafficking. With the support of the International Commission Against Impunity in Guatemala (CICIG), Guatemala improved its ability to investigate and prosecute corruption, money laundering, and other financial crimes. Though the Public Ministry (MP) has improved coordination between prosecutors and law enforcement agencies to conduct financial investigations and consider money laundering charges when investigating predicate offenses such as extortion, corruption, and trafficking investigations, more progress is needed. CICIG’s departure from Guatemala in September 2019 puts anticorruption gains at risk, given the weakness of Guatemalan institutions, and the influence narco-traffickers have over elected officials.
Guatemala should continue to develop its capacity to conduct financial crime investigations by improving communication and coordination among the Guatemalan Special Verification Agency (IVE), Guatemala’s FIU; the National Civil Police (PNC) Financial Investigation Unit; and the MP. Additionally, Guatemala should institutionalize coordination between the MP and the National Secretariat for Administration of Forfeited Property (SENABED) (the entity that manages seized assets), provide greater autonomy to SENABED, and increase staffing of key agencies.
In order to maximize effectiveness and decrease inefficiencies in its AML regime, Guatemala should increase budgetary support for the MP, in particular the Special Prosecutor’s Office Against Impunity, to strengthen anti-corruption efforts, and address the systemic weaknesses that allow for pervasive corruption within Guatemala’s institutions. Strong anti-corruption mechanisms are needed to root out corrupt actors and hold them to account.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 25
World Governance Indicator – Control of Corruption 19
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
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
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.
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