A 2005 report by the World Bank notes that one of the major financial sector reforms underway in Guatemala (with assistance from the World Bank) is to enact anti money laundering (AML) legislation that complies with international norms. The U.S. Department of State (DoS) reported in 2007 that Guatemala was on the Financial Action Task Force (FATF) list of Non-Cooperative Countries and Territories (NCCT) until 2004. However the report noted that reforms implemented have brought the country closer to complying with international standards, and the FATF removed Guatemala from the NCCT list in 2004. The Law Against Money and Other Assets Laundering (Decree 67/2001) states that money laundering is punishable by prison terms ranging from 6 to 20 years, and fines equal to the value of the assets, instruments, or products resulting from the crime. Guatemala has passed legislation criminalizing terrorist financing and according to the 2007 U.S. DoS report this new legislation brings Guatemala's regime to combat the financing of terrorism more in line with FATF Special Recommendations on Terrorist Financing and the United Nations Security Council Resolution 1373 Against Terrorism. The financial intelligence unit (FIU) in Guatemala is the Intendencia de Verificación Especial (IVE), which operates within the Superintendence of Banks as established by Decree 67-2001. The IVE is responsible for supervising financial institutions.

General Overview

The U.S. Department of State (DoS) in its 2007 report, "International Narcotics Control Strategy Report 2007" notes that Guatemala was on the FATF list of Non-Cooperative Countries and Territories (NCCT) until 2004. However, reforms implemented by the authorities in Guatemala brought the country closer to compliance with international standards. As a result, the FATF removed Guatemala from the NCCT list in 2004. A 2005 report by the World Bank notes that one of the major financial sector reforms undertaken by Guatemala with assistance from the World Bank was to enact anti money laundering (AML) legislation that complies with international norms.

The 2007 U.S. DoS report identifies Guatemala as one of the major illicit drug producing and drug-transit country, which ships products to the United States and Europe. However, the Guatemalan government - although short of sufficient resources to deal with narcotics - has made progress in restructuring the police functions to fight narcotics, and has continued its eradication efforts. The 2007 U.S. DoS report states that the Law Against Money and Other Assets Laundering (Decree 67-2001) declares money laundering to be punishable by prison terms ranging from 6 to 20 years, and fines equal to the value of the assets, instruments, or products resulting from the crime. According to the same report "the law holds institutions and businesses responsible for failure to prevent money laundering or allowing money laundering to occur, regardless of the responsibility of owners, directors or other employees, and they may face cancellation of their banking licenses and/or criminal charges." Guatemala passed legislation in 2005 criminalizing terrorist financing and, according to the 2007 U.S. DoS report, "the new legislation brings Guatemala into greater compliance with FATF Special Recommendations on Terrorist Financing and the United Nations Security Council Resolution 1373 Against Terrorism."

According to the 2007 U.S. DoS report, the "Superintendence of Banks (SdB) is governed by the Monetary Board, and is charged with the oversight and inspection of the central bank and the rest of the banking system, including credit institutions, financial enterprises, securities entities, insurance companies, currency exchange houses and other institutions defined by the Bank of Guatemala Act. The report adds that Guatemala's financial intelligence unit (FIU) is the Intendencia de Verificación Especial (IVE) which operates within the SdB as established by Decree 67/2001, possesses a staff of 26 and is responsible for supervising financial institutions.

The 2007 U.S. DoS report stated that Guatemala has created a money laundering task force comprised of individuals from the Guatemalan Tax Authority (SAT), the IVE, Public Ministry, Prosecutor's Office, Government Ministry, National Police and Drug Police. In addition, the report also noted that the Guatemala is a party to the United Nations (UN) Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. Moreover, the Government of Guatemala is a member of the OAS Inter-American Drug Abuse Control Commission Experts Group to Control Money Laundering and the Caribbean Financial Action Task Force (CFATF). The IVE is a member of the Egmont Group.

The Principles

1. Legal Systems and Related Institutional Measures

ID

A 2005 report by the World Bank notes that one of the major financial sector reforms underway in Guatemala (with assistance from the World Bank) is to enact anti money laundering (AML) legislation that complies with international norms. Guatemala's Law Against Money and Other Assets Laundering (Decree 67-2001) states that money laundering is punishable by prison terms ranging from 6 to 20 years, and fines equal to the value of the assets, instruments, or products resulting from the crime. According to the U.S. DoS 2007 report, "the law holds institutions and businesses responsible for failure to prevent money laundering or allowing money laundering to occur, regardless of the responsibility of owners, directors or other employees, and they may face cancellation of their banking licenses and/or criminal charges." Guatemala has in 2005 passed legislation to criminalize terrorist financing, and the 2007 U.S. DoS report stated that the new law enhances Guatemala's compliance with the FATF's Special Recommendations on Terrorist Financing and the United Nations Security Council Resolution 1373 Against Terrorism. The report also notes that the Guatemala is a party to the United Nations (UN) Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. Guatemala's current legislation permits authorities to seize all and any assets related to money laundering and, according to the 2007 U.S. DoS report, "the new counterterrorism financing legislation removed potential uncertainty regarding the legality of freezing assets when no predicate offense had been legally established but the assets have been determined destined to terrorists or to support terrorist acts."

Guatemala's financial intelligence unit is the IVE, which operates within the Superintendence of Banks (as established by Decree 67-2001) and is responsible for supervising financial institutions. However, according to the 2007 U.S. DoS, the lack of sufficient resources from the government hinders the dealing with narcotics. The report also notes that "since its inception, the IVE has received approximately 1,600 suspicious transaction reports (STRs) from the 400 obligated entities in Guatemala." Of these, 39 cases were referred by the IVE to the AML Unit, within the Public Ministry and 13 money laundering prosecutions have been concluded, 12 of which resulted in convictions.

In 2006, as per the 2007 U.S. DoS report, Guatemala created a joint money-laundering task force unit comprised of individuals from the Guatemalan Tax Authority (SAT), the IVE, Public Ministry, Prosecutor's Office, Government Ministry, National Police, and Drug Police. Furthermore, Decree 67-2001 requires obligating individuals and legal entities to report to the competent authorities the cross-border movement of currency in excess of approximately $10,000.

2. Preventive Measures - Financial Institutions

II

There is insufficient information publicly available as to Guatemala's compliance with this Principle. The 2007 U.S. DoS report noted that the Regulation to Prevent and Detect the Laundering of Assets (RPDLA) "requires all financial institutions under the oversight and inspection of the SdB to establish anti-money laundering measures, and introduces requirements for transaction reporting and record keeping,," and the report adds that the financial sector in Guatemala has "largely complied" with RPDLA requirements. The report also notes that "covered institutions are prohibited from maintaining anonymous accounts or accounts that appear under fictitious or inexact names."

The 2007 U.S. DoS report also notes that Guatemala's financial institutions are required to keep registries of customer information, along with records of cash transactions of $10,000 or more per day. These transactions must be retained for five years, and reported to the IVE, along with all suspicions transactions.

The IVE operates within the SdB (as established by Decree 67-2001) and is responsible for supervising financial institutions. According to the 2007 U.S. DoS report, the IVE is authorized "to obtain all information related to financial, commercial, or business transactions that may be connected to money laundering." The report also notes that, as of 2007, the IVE had imposed over $100,000 in civil penalties on institutions that failed to comply with anti-money laundering regulations. Since its inception, the IVE, has received approximately 1,600 suspicious transaction reports from the 400 obligated entities in Guatemala.

3. Preventive Measures - Designated non-Financial Business and Professions

II

There is insufficient information publicly available as to Guatemala's compliance with this Principle.

4. Legal Person and Arrangements & Non-Profit Organizations

II

There is insufficient information publicly available as to Guatemala's compliance with this Principle.

5. National and International Co-operation

II

The 2007 U.S. DoS report notes that Guatemala is a party to the United Nations (UN) Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. Moreover, as per the report, the Government of Guatemala is a member of the OAS Inter-American Drug Abuse Control Commission Experts Group to Control Money Laundering and the Caribbean Financial Action Task Force (CFATF), and the IVE is a member of the Egmont Group. However, there is insufficient information publicly available as to Guatemala's compliance with this Principle.