With the coronavirus pandemic now likely to weaken state capacity across Latin America, money laundering – including trade-based money laundering (TBML) – will continue to flourish, according to two analysts based in separate Washington-based think tanks.
Andrés Martínez-Fernández and Julia Yansura sayweakened capacity to fight money laundering and the illegal activities that generate dirty money will facilitate more corruption and insecurity while undermining the integrity and effectiveness of government efforts to cushion their economies from the fallout of the pandemic.
Authorities in the region already find tackling money laundering a challenge while illicit funds typically enter the financial system only once their origin has been partially obscured through a commercial transaction, making detection difficult according to the analysts.
They say methods used to launder money are diverse, complex and constantly evolving and include non-banking methods, like old-fashioned bulk-cash smuggling, or real estate purchases made through anonymous shell companies while TBML is another common tool.
Latin American governments can however make headway against corruption and money laundering by addressing some common vulnerabilities, including insufficient oversight of the non-financial sector say the two experts.
A focus on certain businesses – such as real estate agencies, jewellers and casinos that allow high-value transactions with little transparency and are often used to launder illicit revenue from organised crime and corruption – would also help they conclude.
Martínez-Fernández is a senior research associate with the American Enterprise Institute, where he works on transnational organised crime and economic development in Latin America.
Yansura is a research analyst at the think-tank focused on illicit financial flows, Global Financial Integrity, where her work focuses on transparency, security and economic development in Latin America and the Caribbean.
Their analysis, Money Laundering Could Stifle Latin America’s Response to COVID-19, published by World Politics Review can be found here.
Categories: Trade Based Financial crimes News