LatinFinance - January/February 2013 - 34

Money laundering

risk is lower, Lozano says. This is because
Mexican stock market regulator Comisión
Nacional Bancaria y de Valores (CNBV)
has stepped up cooperation with financial
intelligence units across central America
and most notably with Guatemala, El
Salvador and Belize. The aim has been to
strengthen their laundering controls to
ensure their banks don’t cooperate with
their Mexican counterparts to launder
funds from drugs or terrorist groups.
Accordingly, Guatemala has sharply
improved its anti-laundering systems
while countries with poor anti-laundering
profiles such as El Salvador and Nicaragua
will likely follow suit.
The CNBV also recently cut Mexican
banks’ deadline to implement Basel III,
further tightening regulations aimed at
curbing banks’ risk taking.
“This is going to force banks to meet
the international regulation, not just in
Mexico, but probably across their Latin
American franchises,” says Lozano. “This
will help them reduce operating and
administrative risks including money
laundering.”
A number of regional and international
banks contacted by LatinFinance declined
to comment. But BBVA, replied in a
statement: “For BBVA, fighting against
money laundering and terrorism financing
is a primary objective. For that reason our
corporate [anti-laundering] model is solid
and in constant development. It has been
implemented in all the jurisdictions we
operate in with satisfactory results.”

Scramble to tighten controls

Lozano hopes the HSBC case will spur the
US Justice Department to scrutinize other
Latin American banks to boost compliance
rates. She hopes that Mexico’s fledgling
anti-money laundering legislation, which
increases vulnerable non-financial sectors’
(such as notaries, real-estate firms and
jewelers) accountability for laundering
crimes, will help reduce the trade.
As the HSBC scandal rippled across
Latin America, banks throughout the
region rushed to improve their laundering
policies, according to Ricardo Sabella,
founder and director of anti-laundering
consultancy MVC Risks in Montevideo,
Uruguay.
“There were two key impacts from

34 LatinFinance

MoneyLaundering.indd 34

while Mexico, stands in the middle of the
FATF list. However, its new anti-money
laundering law could soon boost its
ranking.
In February, the FATF modified its 40
global anti-laundering recommendations,
introducing three new ones. The first asks
nations to carry out money-laundering
investigations from a risk-based approach
– a move experts hope will help curb
money laundering around the world. The
rule calls for countries to focus their antilaundering efforts on the most vulnerable
economic sectors. It will replace the
former recommendation, which asked
governments to chase money-laundering
crimes on a more general basis.
“With the new rules countries must
analyze each economic sector’s risk profile
and evaluate whether their laundering
controls are appropriate,” says Sabella. “If
not, they must take the necessary steps to
ensure those controls are strengthened.”
FATF hopes the new rule will boost
global compliance. The FATF’s two
other new rules ask countries to prevent
financing of weapons of mass destruction
and add tax evasion as a crime often linked
	 Mireya Lozano, ACAMS
to money laundering.
Heather Lowe, director of government
affairs at financial crimes consultancy
Global Financial Integrity, says coaxing
standards,” Sabella claims, saying
banks to improve controls won’t be easy.
Gafisud had added Latin America’s thirdWhile agreeing HSBC’s mess will force
largest economy to its “watch for” list in
many institutions to beef up compliance,
2011. “Argentina has open laundering
doing so will also mean they will have to
investigations but has not really moved
turn down business.
on any of them. It seems like they are just
“Most crime exists to make money.
doing this to tell Gafisud ‘look, we are
That money has to go somewhere and the
complying.’”
Argentina’s CNV stock market regulator obvious choice is banks,” Lowe says.
She cites Wachovia, which in 2010
declined to comment. The Financial
paid $160 million to settle a Mexican
Intelligence Unit did not return messages.
Sabella says Paraguay – once known as laundering case, as an example of how
a big scandal doesn’t necessarily trigger
a money laundering haven – has cleaned
lasting regulation.
up its act in recent months. “They came
“Remember Wachovia?” she says. “It
off Gafisud’s watch list last June,” he says.
was laundering money in Mexico and what
“They showed a political willingness to
happened after that? We had HSBC. I hope
improve their regulations and launched
we won’t be having this conversation two
a national plan to prevent money
laundering, based on the FATF’s latest risk- years from now.
“There is a greater emphasis on
based recommendations.”
regulation after HSBC but money
Uruguay also updated its laundering
laundering is still a tough crime to prove.
legislation in 2008 to meet most of
Investigations take a long time to process,
Gafisud’s recommendations, according to
sometimes years and even then, it’s not
Sabella. He says, Colombia has the best
easy to prosecute executives.” LF
laundering controls in South America
HSBC’s scandal in Mexico,” Sabella says.
“One, all the HSBC units in Latin America
rushed to improve controls; second, all
other banks quickly followed suit.
“Laundering controls have been
strengthened across the board. Nobody
likes to have a money laundering scandal
in their backyard.”
MVC Risks is working with banks in
Peru and other countries to improve their
systems, Apart from Peru, Sabella says
Argentina, Brazil, Bolivia and Ecuador
have South America’s weakest laundering
regulations, at least according to a recent
survey by Gafisud, the FATF’s South
American arm.
“Argentina has never met the

“This is going to force
banks to meet the
international regulation,
not just in Mexico”

January/February 2013

1/9/13 11:28 AM
LatinFinance - January/February 2013

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