Peru Tackles Money Laundering via Currency Exchange

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Peru’s recent approval of fairly rudimentary monitoring of currency exchange services is one sign of how far the country has to go in its anti-money laundering efforts.

As part of the government’s ongoing efforts to combat money laundering, on October 28 Peru’s Superintendent of Banking and Insurance (SBS) approved regulations requiring currency “exchange houses” to register clients conducting transactions of $5,000 or greater value. Those making transactions valued between $200 and $5,000 will be required to show identification.

Additionally, “high risk” clients, such as non-Peruvians and unregistered businesses, will be subject to extra scrutiny. Information on transactions of $5,000 or greater will periodically be sent to the SBS’s Financial Intelligence Unit (UIF) for review.

The regulation is set to go into effect March 1, 2016.

InSight Crime Analysis

When it comes to money laundering, Peruvian officials seem aware they have a serious problem on their hands. In recent years, Peru’s growing economy and expanding service industry has opened vulnerabilities for criminal groups to exploit in order to legitimize illicitly-earned gains.

Peru’s move towards stricter oversight of currency exchange is a positive development. Nonetheless, it is a rather rudimentary step, indicating how far the country has to go towards establishing a comprehensive and effective anti-money laundering policy. (As recently as 2012, Peru’s justice minister admitted the country had zero convictions for money laundering.)

SEE ALSO: Coverage of Money Laundering

Recent figures shed light on the potential scale of money laundering within Peru. According to El Comercio, since 2010 the SBS has registered over 3,000 transactions linked to money laundering and financing of terrorism. The UIF reportedly estimates the amount of money moved in these suspicious transactions amounts to more than $8 billion.

The SBS figures also suggest that the government would do well to target money laundering connected to illegal gold mining. As El Comercio reported, the SBS believes that 44 percent of suspicious financial transactions since 2010 — a figure that amounts to $4.35 billion — are linked to gold mining. In contrast, 31 percent were connected to drug trafficking ($3.11 billion) and 7 percent to corruption ($716 million). Peru’s illegal gold trade is worth an estimated $3 billion a year, and, as the SBS numbers suggest, could now be bringing in bigger profits than the drug trade

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