Honduras Country Summary

FATF Status

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

Latest FATF Statement - 16 February 2012

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

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.

Corruption in Honduras significantly hampers investment, affecting various sectors such as government procurement and real estate transactions. High-profile cases, like that of Victor Bendeck, illustrate the pervasive nature of corruption, prompting the Castro administration to seek international assistance in combating it. Despite ratifying multiple anti-corruption conventions, the country continues to struggle with organized crime, human trafficking, and financial crimes, exacerbated by weak institutions and a lack of resources.

Honduras has a diverse economy with significant contributions from agriculture, industry, and services, but it faces challenges due to government policies that create uncertainty for investors. Despite its competitive advantages, including proximity to U.S. markets and a skilled labor force, many businesses struggle with access to foreign currency and face operational difficulties stemming from regulatory complexities and political instability. The government's efforts to reform the energy sector and attract foreign investment have been hampered by ongoing concerns about expropriation, corruption, and inadequate infrastructure.

Honduras presents a challenging investment climate characterized by significant uncertainty stemming from government policies and legislation, which has limited opportunities for both domestic and international investors. Despite its competitive advantages, including proximity to U.S. markets and a skilled labor pool, many companies face operational difficulties, particularly in accessing U.S. dollars due to strict regulations by the Central Bank. Concerns over political stability, potential expropriation, and a lack of clarity in the legislative framework further exacerbate the hesitance of investors to commit to new ventures in the country.