The Inter-American Development Bank noted that money laundering in the Latin American region was ”possibly the highest in the world…somewhere between 2.5 and 6.3 percent of the regional gross domestic product. ” Regulatory authorities including the U.S. Department of State , the Financial Action Task Force (FATF), the Office of Foreign Assets Control (OFAC), and the Financial Crimes Enforcement Network (FinCEN) have over the past decade called out Bolivia, Colombia, Guatemala, Paraguay, Ecuador, Peru and Venezuela as posing a high risk for money laundering and/or terrorist financing.
Factors such as failure to criminalize money laundering, legal uncertainty among government agencies and the prevalence of illegal operations appear to be at the heart of the problem. Additionally, risk is enhanced by the presence of many less regulated Casa de Cambios and Money Service Businesses (MSBs). Combined, this presents a formidable challenge for financial institutions (FIs) seeking to establish secure banking relations in Latin America.
When developing the requirements to be collected, EDD may include gathering detailed information in areas such as banking references, site visitations, nature of business, geographic exposure (such as target market of the customer), owners and controlling parties and source of wealth. The processes used to collect this information may vary; however, the identification and documentation of appropriate questions and due diligence requirements are important beginning steps. Collection may involve contacting the customer directly, obtaining information internally from bank systems or using third-party tools .
EDD by entity type