FATF Status

Spain 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 Spain was undertaken in 2019. According to that Evaluation, Spain was deemed Compliant for 28 and Largely Compliant for 10 of the FATF 40 Recommendations. It was also deemed Highly Effective for 1 and Substantially Effective for 9 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Money Laundering / Terrorism Financing Risks (FATF Mutual Evaluation)

Spain faces a range of money laundering (ML) and terrorist financing (TF) risks, and the following are particularly important in the Spanish context.

Organised criminal groups, comprised of both Spanish nationals and/or foreign criminals, are active in Spain. Criminals from several countries live in Spain, often taking advantage of the sometimes large resident communities of fellow citizens, and may continue their business from Spain, launder the proceeds of crime in Spain, or even invest criminal proceeds in Spain after they have been laundered elsewhere.

Real estate transactions have been involved in recent significant criminal cases and appear to be a major means of ML in Spain. ML through real estate is internationally a subject of concern in its own right. Many cases have involved foreign criminals resident in Spain laundering the proceeds of foreign crime through the Spanish real estate sector. The real estate and construction sectors in Spain underwent a boom in the years before 2009, followed by a significant contraction (during which illicit activity generally becomes more visible). Several high-profile ML cases in recent years (for example, White Whale, and Operation Malaya) have involved major real estate transactions, including the use of cash purchases, and complex networks of companies (and, on occasion trusts) often constituted abroad in nearby off-shore centres, such as Andorra or Gibraltar. There have also been some corruption cases linked to this sector, as described in more detail below.

Spain is a trans-shipment point for cross-border illicit flows of drugs entering Europe from North Africa and South America. Criminals also use Spain as a location to launder the proceeds of the crimes committed in Spain prior to transferring them back to their country of origin. The market for illicit drugs remains dynamic within Europe’s criminal markets, with approximately one third of European organised crime groups involved in its distribution and production. While drug offences and official seizures in Spain have declined slightly in the past several years, Spain remains a logistical hotspot for African and Latin American organised crime groups, with linguistic and cultural ties to the region. While Colombian cocaine dealers represent the traditional threat, Romanian, Nigerian, Mexican and North African groups have recently entered the drug trade. These groups often import synthetic drugs and hashish from Asia and Northern Africa respectively.

Spain’s geographic position, including the North African enclaves Melilla and Ceuta, expose it to the risk of ML and TF through illicit movement of cash across Spain’s borders. The volume of cash movement associated to cross-border trading and to the informal economy across Spain’s borders with Morocco in Ceuta and Melilla poses a high risk to camouflage cash flows associated with drug trafficking, tax and customs fraud, counterfeiting and human trafficking.

The money or value transfer service (MVTS) sector has proven vulnerable to exploitation by organised criminal groups seeking to move their illicit gains out of the country.

Spain’s general economic situation also affects the ML risks. The recent recession has put pressure on Spain’s fiscal position (leading to increased taxation), and has left persistent high unemployment (relative to other EU members). Spain’s black economy6 represents a significant share of economic activity, comparable with other countries in the region. These factors indicate an elevated risk of tax crimes. Tax crimes, including VAT fraud and evasion of customs duties, are a problem, and there have been a number of large cases in this area which highlight the significant scale of tax crimes in Spain.

Spain faces significant TF risks, and has been the victim of terrorist attacks, from two main groups—the home-grown separatist terrorist groups such as Euskadi ta Askatasuna (ETA), and Islamist terrorist groups (many of which have links to the al-Qaeda network).

ETA has been characterised by a sophisticated structure, including a branch of operations responsible for financing its activities. The organisation also has strong ties with the Basque region of France, which adds a trans-national element. ETA’s methods of TF have ranged from fundraising through raffles, lotteries, and mobile taverns (txoznas), through to extortion (a so-called revolutionary tax), through to operating a complex network of revenue-generating companies. Some abuse of non-profit organisations (NPOs) has also been observed. Through successful investigations and prosecutions, Spain has effectively dismantled the economic wing of ETA and a cease-fire has held for some years. However, ETA has not entirely disappeared and remains a very real risk in Spain.

Spain also faces high terrorism and TF risk from Islamist terrorist groups, many of which have links to the al-Qaeda network. Unlike ETA, these groups tend to operate through small cells that are primarily self back to neighbouring countries in North Africa and the Maghreb, often using informal MVTS (hawaladar) to do so.

Spain is a major advanced economy with a well-developed financial sector, and is exposed to the same general ML/TF risks that affect other advanced economies. The risks affecting the financial sector are also influenced by the financial crisis of 2009-10, which saw significant consolidation in the banking sector in particular.

Spain has no official estimate of the overall value of criminal proceeds or specific types of crime. However, Spanish officials estimate that the value of assets held by high-intensity criminal organisations and standard criminal organisations is EUR 427 million and EUR 1 billion respectively.

US Department of State Money Laundering assessment (INCSR)

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

Overview

Spain proactively identifies, assesses, and understands its money laundering vulnerabilities and works to mitigate risks.  Spain remains a logistical hotspot for organized crime groups based in Africa, Latin America, and the former Soviet Union and is a transshipment point for illicit drugs entering Europe from North Africa and South America.  Spain largely complies with international anti-money laundering/combating the financing of terrorism (AML/CFT) standards and in general has updated AML/CFT regulations and competent authorities. 

The government continues to build on its already strong measures to combat money laundering.  In November 2019, Spain joined five other European Union (EU) member states to call for the establishment of a new supervisory authority to lead the bloc’s AML efforts as well as updated AML regulations.  In May 2020 this effort culminated in the European Commission’s adoption of an action plan for a comprehensive EU policy on preventing money laundering and terrorism financing, which was implemented in July 2021.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           60

World Governance Indicator – Control of Corruption             75

Bribery is not widespread in business dealings in Spain, yet companies cite corruption as a business impediment. Many corruption cases have been initiated in recent years, revealing corruption risks and mismanagement in local-level public procurement in urban planning and construction. The Criminal Code (in Spanish) makes it illegal for individuals to offer and accept bribes, and corporate entities can be held criminally liable for corruption offences committed by their representatives. Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on the intent and benefit obtained. Spain's attempts to limit corruption have intensified in recent years. New anti-corruption units have been created, new transparency-enhancing legislation has been passed, and efforts have been made to improve public control and governance systems. As a result, corruption investigations, arrests and prosecutions have significantly increased. For further information - GAN Integrity Business Anti-Corruption Portal

Spain is open to and actively courting foreign investment as it continues its economic recovery from the COVID-19 pandemic, which caused GDP to plummet by 11 percent in 2020 following six years of growth (2014-2019). By building on healthy fundamentals and fueled by up to nearly 150 billion euros in Next Generation EU recovery funds, Spain rebounded with 5.1 percent GDP growth in 2021 and 5.5 percent growth in 2022, with a 1.5 percent growth outlook for 2023. Unemployment improved to 12.5 percent for 2022. Economic activity is expected to return to its pre-crisis level in 2023, though Russia’s unprovoked war in Ukraine, high energy prices, supply chain disruptions, and inflation could weaken the recovery. Service-based industries, particularly those related to tourism, and energy-intensive industries remain most vulnerable to economic shock. Spain’s key economic risks are high public debt levels and ballooning pension costs for its aging population, coupled with high energy prices and inflation, though these areas are targets for government reforms.

Spain’s excellent infrastructure, well-educated workforce, large domestic market, access to the European Common Market, and leadership on renewable energy make it an appealing foreign investment destination. Spanish law permits up to 100 percent foreign ownership in companies, and capital movements are completely liberalized. According to Spanish data, in 2022 foreign direct investment flow into Spain was nearly EUR 34.2 billion, up 13.9 percent from 2021. Of this total, EUR 9.4 billion came from the United States, the largest investor in Spain in new foreign direct investment. Foreign investment is concentrated in the energy, real estate, financial services, engineering, and construction sectors.

Spain plans to use its Next Generation EU recovery funds to transform the Spanish economy, especially through digitalization and greening of the economy, to achieve long-term increases in productivity and growth. Full financing is contingent on additional economic reforms beyond labor and pension reform, which were concluded in 2022 and 2023. Spain’s credit ratings remain stable, and issuances of public debt – especially for green bonds – have been oversubscribed, reflecting strong investor appetite for investment in Spain. However, small- and medium-sized enterprises (SMEs), which account for more than 99 percent of Spanish businesses and were acutely impacted by the COVID-19 pandemic, still have some difficulty accessing credit and rely heavily on bank financing. Small firms also experience more challenges accessing EU recovery funds.

Country Links

Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences (SEPBLAC)​

Bank of Spain