FATF Status

Peru is not on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Peru was undertaken in 2020. According to that Evaluation, Peru was deemed Compliant for 16 and Largely Compliant for 19 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 4 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.​

US Department of State Money Laundering assessment (INCSR)

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

Overview

Peru inaugurated a new president in July 2021.  Peru has experienced challenges in effectively enforcing and implementing its strong anti-money laundering (AML) regime.  Poor interagency coordination and corruption within the justice sector impede enforcement efforts.  Information sharing is limited but improving.  Weak regulatory enforcement and oversight of the small-scale mining and timber sectors are concerns.

The Peruvian government identified $422 million in potentially illicit funds flowing through Peru from January to September 2021 – a 58 percent decrease from the same period in 2020.  Peru continued to enforce COVID-19 restrictions during this time. 

According to Peru’s financial intelligence unit (FIU), illegal mining constitutes more than half of all money laundered in Peru in the past nine years.  Illegal mining made up $1.36 billion of identified funds from June 2020-May 2021, while drug trafficking comprised $125 million.  Drug traffickers launder profits through illegal mining activities and gold transactions.

The government strengthened its AML regime in 2021, including by applying the oral accusatory system to all money laundering cases.  Peru continued implementing its 2018-2021 National Plan to Combat Money Laundering and its asset forfeiture system produced concrete results.  In July, Peru began formulating a new national plan for 2022.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         33

World Governance Indicator – Control of Corruption             22

Corruption is a serious problem for businesses in Peru, with irregular payments, bribes and favouritism of government officials in awarding contracts being particularly common. In fact, a very weak judiciary, inefficient government bureaucracy and high levels of favoritism have culminated in high corruption levels in almost all sectors of the Peruvian economy. Corruption is criminalized through Decree No. 635 of the Peruvian Penal Code (in Spanish), which covers attempted corruption, extortion, passive and active bribery, money laundering and bribery of foreign officials. Anti-corruption laws are however, poorly enforced by the government. The Corporate Anti-Corruption Act is expected to enter into force in July 2017, and under which companies can be held directly liable for corruption offenses. The official procedure of accepting gifts and small courtesies is not specified in the penal code, thus also representing a risk for companies. Further, Peru’s Penal Code does not explicitly criminalize facilitation payments. For further information - GAN Integrity Business Anti-Corruption Portal

The Government of Peru’s (GOP’s) tradition of pursing sound fiscal and macroeconomic policies contributed to extended periods of region-leading growth over the last two decades. Since 2020, however, increased levels of political instability and related social conflict negatively impacted investor confidence and growth prospects according to each of the major credit rating agencies (i.e., Fitch, Moody’s, and S&P). Peru’s GDP growth in 2022 was 2.7 percent, below the nation’s pre-pandemic trend and well below its four to five percent growth trends achieved prior to 2015. In March 2023, the Central Reserve Bank of Peru (BCRP) forecasted GDP growth in 2023 would remain relatively low at 2.6 percent due in large part to continued social conflicts curtailing the mining and tourism sectors as well as adverse climatic conditions restricting agriculture and fishing production. After significant COVID-19 related spending, the GOP’s deficit stabilized to 1.6 percent of GDP in 2022. The BCRP anticipated government debt levels to also improve, from 34.0 percent of GDP in 2022 to 32.1 percent of GDP by the end of 2024, according to its March 2023 reporting. The country’s net international reserves remain strong at $74.0 billion. External global forces pushed Peru’s inflation to 8.5 percent in 2022, a significant spike from 1.8 percent in 2020. The BCRP’s March 2023 report forecasted year-end 2023 inflation would settle at 3.0 percent (within the BCRP’s acceptable one to three percent range).

Along with recent political instability – in 2022, President Dina Boluarte became Peru’s fifth president since 2020 – corruption and social conflict pose risks to Peru’s investment climate. Transparency International ranked Peru 101st out of 180 countries in its 2022 Corruption Perceptions Index. Peru’s Ombudsman reported 162 active social conflicts in the country as of February 2023. More than half of them (95) occurred in the mining sector, which represents 10 percent of Peru’s economic output. Citing political instability, including governance challenges and contentious relations between the administration and congress, the three major credit rating agencies (Fitch, Moody’s, and S&P) downgraded Peru’s sovereign credit ratings between September 2021 and March 2022. All three, however, maintained Peru at investment grade.

Private sector investment made up 79.9 percent of Peru’s total investment in 2022. Peru fosters an open investment environment, which includes strong protections for contract and property rights, and grants national treatment for foreign investors. Peru is well integrated in the global economy including with the United States through the United States-Peru Trade Promotion Agreement (PTPA), which entered into force in 2009 and helped drive more than $22 billion in two-way trade in 2022. Peru’s investment promotion agency, ProInversion, seeks foreign investment in nearly all areas of the economy, particularly to support infrastructure. In the past few years, several companies from the region, and from China, North America, and Europe have begun actively buying local companies in key sectors such as energy generation and distribution, power transmission, fishmeal, and retail. Prospective investors would benefit from seeking local legal counsel to navigate Peru’s complex bureaucracy.

Country Links

Financial Intelligence Unit of Peru (FIU-Peru)​

Superintendencia de Banca, Seguros y AFP (SBS)

Superintendencia del Mercado de Valores (SMV)

Central Reserve Bank of Peru