Honduras Country Summary

FATF Status

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

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Honduras was undertaken in 2020. According to that Evaluation, Honduras was deemed Compliant for 18 and Largely Compliant for 14 of the FATF 40 Recommendations. It remains Highly effective for 1 and Substantially Effective for 2 of the Effectiveness & Technical Compliance ratings.

Honduras faces significant challenges related to crime and corruption, with pervasive issues in public sector integrity and a judiciary system that is often compromised. The country is a hub for various criminal activities, including human trafficking, drug trafficking, and extortion, exacerbated by weak institutions and a lack of resources for law enforcement and judicial processes.

Despite the government's commitment to reform and combat organized crime, inherited corruption and political instability hinder progress. International cooperation, particularly with the United States, is crucial in addressing these challenges, but the resilience of civil society and effective crime prevention measures remain inadequate, leaving many citizens vulnerable to crime and exploitation.

Honduras presents a mixed economic landscape characterized by both potential and significant challenges for investment. While the country benefits from competitive advantages such as proximity to U.S. markets and a skilled labor pool, investor confidence is undermined by uncertainties related to government policies, legislative changes, and operational difficulties, particularly concerning access to foreign currency and regulatory complexities. The government's recent focus on increasing state involvement in the economy, coupled with ongoing issues like corruption, high crime rates, and a lack of transparency, further complicate the investment climate, leading many businesses to hesitate in making new commitments despite the country's efforts to streamline processes and attract foreign direct investment.