Honduras

Sanctions

No

FATF AML Deficient List

No

Higher Risk

Not on EU White list equivalent jurisdictions
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Failed States Index (Political Issues)(Average Score)
International Narcotics Control Majors List

Medium Risk

US Dept of State Money Laundering Assessment 

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ANTI-MONEY LAUNDERING

 

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 Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Honduras was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Honduras was deemed Compliant for 13 and Largely Compliant for 17 of the FATF 40 Recommendations.

 

 

US Department of State Money Laundering assessment (INCSR)

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

OVERVIEW

 

Honduras is not a regional or offshore financial center.  Money laundering in Honduras stems primarily from narcotics trafficking by organized criminal groups.  Human smuggling, extortion, kidnapping, and public corruption also generate illicit proceeds, with human smuggling fees regularly paid via MSBs. 

 

Honduras has not completely implemented its 2015 AML and DNFBP laws.  Honduras lacks a national AML strategy, but has focused on high-priority offenses, such as money laundering linked to organized crime.

 

Lack of coordination among units within the National Banking and Insurance Commission (CNBS) limits the operation of the AML regulatory system.  The Interagency Commission for the Prevention of Money Laundering and Terrorist Financing (CIPLAFT) was not active during 2018.  The Tax Administration Service was the only Honduran agency with an active CIPLAFT unit meeting Honduran legal requirements.  

 

The general lack of investigative capacity in complex financial transactions contributes to a favorable money laundering climate.  Mediocre interagency coordination impedes progress towards prosecution of money laundering or other financial crimes.  However, Honduras has been able to achieve some results in money laundering and corruption cases and has sought international cooperation.

 

 

SANCTIONS

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

 

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           29

World Governance Indicator – Control of Corruption             25

Corruption is a major obstacle for businesses investing in Honduras. All sectors of the economy suffer from rampant corruption. Networks of patronage and clientelism dominate the economy, further deteriorating market competitiveness and impeding foreign investors. The government has a legal anti-corruption framework in place through the Penal Code and the Penal Procedures Code. However, enforcement is lacking, and several cases have revealed widespread impunity. Gifts are illegal, yet the practice is widespread, and the use of bribery is an established part of doing business. For further information - GAN Integrity Business Anti-Corruption Portal

ECONOMY

Honduras, the second poorest country in Central America, suffers from extraordinarily unequal distribution of income, as well as high underemployment. While historically dependent on the export of bananas and coffee, Honduras has diversified its export base to include apparel and automobile wire harnessing.

Honduras’s economy depends heavily on US trade and remittances. The US-Central America-Dominican Republic Free Trade Agreement came into force in 2006 and has helped foster foreign direct investment, but physical and political insecurity, as well as crime and perceptions of corruption, may deter potential investors; about 15% of foreign direct investment is from US firms.

 

The economy registered modest economic growth of 2.6%-4.0% from 2010 to 2015, insufficient to improve living standards for the nearly 65% of the population in poverty. In 2015, Honduras faced rising public debt but its economy has performed better than expected due to low oil prices and improved investor confidence. The IMF continues to monitor the three-year standby arrangement signed in December 2014, aimed at easing Honduras’s poor fiscal position.

 

Agriculture - products:

bananas, coffee, citrus, corn, African palm; beef; timber; shrimp, tilapia, lobster, sugar, oriental vegetables

Industries:

sugar, coffee, woven and knit apparel, wood products, cigars

Exports - commodities:

coffee, apparel, coffee, shrimp, automobile wire harnesses, cigars, bananas, gold, palm oil, fruit, lobster, lumber

Exports - partners:

US 36%, Germany 8.7%, El Salvador 8.5%, Guatemala 6%, Nicaragua 5.6%, Netherlands 4.1% (2015)

Imports - commodities:

communications equipment, machinery and transport, industrial raw materials, chemical products, fuels, foodstuffs

Imports - partners:

US 35.2%, China 13.6%, Guatemala 9.2%, Mexico 6.6%, El Salvador 5.1% (2015)

 

Investment Climate  -  US State Department

The United States is Honduras’ most important economic partner, and the government of Honduras continues to strive to improve the investment climate. Yet foreign companies choosing to invest in Honduras still face significant challenges. Honduras’ investment climate is hampered by high levels of crime, a weak judicial system, corruption, low educational levels, and poor transportation and other infrastructure. Over 200 U.S. companies operate in Honduras. Many of them have taken advantage of the opportunities and protections available as a result of Honduras’ participation in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). The stock of U.S. foreign direct investment in Honduras is approximately $750 million. Honduras has made notable improvements in market openness since 2013 as measured by trade freedom, investment freedom, and financial freedom. However, the management of public spending, rule of law concerns, and a high incidence of corruption continue to pose challenges for prospective investors. The 2016 Heritage Economic Freedom Index gave Honduras a score of 57.74, an improvement of 0.3 points from 2015. The World Bank Doing Business 2015 report ranked Honduras 110 out of 189 countries, an improvement of 15 places since the 2013 report.

 

Country Links
Central Bank of Honduras
Comisión Nacional de Bancos y Seguros
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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