Saturday, June 27th, 2015 | USD: Buy 528.81 / Sell 541.11
January 15th, 2014 (ISH) In early December, Guatemala’s Public Ministry (MP) and the National Civil Police (PNC) detained 21 individuals suspected of laundering US$46.7 million for the drug trade on behalf of Mexico’s Sinaloa cartel.
A legal fruit and vegetable export company served as the façade, allegedly laundering the money with payments for shipments of avocados to Mexico, China and the United States, according to the Office of the Prosecutor for Money Laundering.
Subsequently, alleged members of the company traveled to withdraw the money from bank accounts in the countries where it had been deposited.
The 21 defendants could be sentenced to between six and 20 years in prison if found guilty, Attorney General Claudia Paz y Paz said.
It was a substantial blow to organized crime, as the Special Verification Office (IVE) of the Superintendency of Banks (SIB) filed 76 complaints of alleged money laundering involving a total of US$58.2 million from January to June 2013.
In 2012, a total of 131 suspicious transactions totaling US$31.9 million were reported.
The biggest obstacle facing Guatemalan authorities in their fight against money laundering is the bank secrecy law in the Tax Code and the Banking Law, according to Jonathan Menkos, executive director of the Central American Institute of Fiscal Studies.
“All the Central American countries are moving to change the features that make them part of an increasingly inconvenient group of tax havens,” he said. “There have been noticeable changes in Costa Rica and Panama. However, Guatemala has yet to take decisive actions regarding the regulation of the secrecy of its banks.”
Currently, only the IVE can access bank accounts because of a suspicious transaction. The office begins an investigation that’s passed to the Office of the Prosecutor, according to Leonel Lira, a congressman representing the Encuentro Por Guatemala party.
Congress is analyzing a proposed bill that would provide better tools to the Tax Administration Superintendency to access and verify, without restriction, the real income of bank account holders, according to Menkos.
“Through [the number of suspicious transaction reports] it’s possible to see that more work has been done, though the cases have not been made public and have remained confidential because they are being handled by the MP,” said Ramón Tobar, the head of the SIB.
Of the 2012 reports made to the MP, 30% involved corruption, 28% involved extortion, 17% involved drug trafficking, and the rest had to do with scams, human trafficking, tax fraud, illegal adoptions and other forms of fraud, according to IVE.
“The [financial institutions] have a responsibility to report [to the IVE] when they become aware of an unusual transaction that doesn’t have an apparent legal economic foundation, which then becomes the basis for a subsequent complaint,” Tobar said.
Paz y Paz added that just one case can involve up to 50 bank accounts through which the money is transferred.
“This is the way in which these groups seek to throw people off the money trail,” she said. “But the money ultimately returns to wherever these structures want it to go.”
SIB doesn’t provide estimates of how much money is laundered in Guatemala, but the seizure of money can provide an idea of the volumes people attempt to launder nationwide.
Between January and Nov. 18, 2013, the PNC seized US$11.4 million in cash, mostly from people who attempted to enter or leave the country through the La Aurora International Airport.
The scope of networks operating in Guatemala has been extending to other countries. The Office of the Prosecutor for Money Laundering is investigating transactions that involve Panama, Costa Rica and Colombia, together with authorities from those countries.
In the past four years, IVE has presented more than 500 cases to the MP. However, only 55 cases have resulted in convictions during this span.
“[This type of crime is difficult to investigate] and takes a lot of time, given that you have to trace an entire line to detect the bank accounts and people involved,” Paz y Paz said.
In 2013, a total of 99 people were accused of money laundering as defined by the laws against the laundering of money or other assets and the financing of terrorism, which have been in effect since December 2001.
Meanwhile, the Forfeiture Law, in effect since December 2010, has allowed for the seizure of US$26.7 million in estates and buildings during 2013, according to the MP.
However, without a law that covers the money that leaves Guatemala for other countries, it’s impossible to make progress, according to Menkos.
“The fight against money laundering has to do with the regulation of banking secrecy, and that’s something that is on the list of the major pending issues for the Guatemalan authorities,” he said.