While most countries in the region have made significant amendments to their legislations, one of the biggest challenges in the region is keeping their legal frameworks updated based on recommendations from international organizations. While many of these countries have legislation in line with international standards, another significant challenge is the effectiveness of implementing these regulations.
In the National Risk Assessments of all countries in the region, a recurrent threat is corruption and its direct link to money laundering. Trends and typologies studies in the region show that criminals are constantly evolving, migrating their actions towards less controlled sectors. Considering that the financial sector has regulations that limit and hinder access to the financial services platform in countries, it has been identified that the highest-risk sectors are non-financial entities.
Among the services provided by the non-financial sector, some that have been regionally identified as the highest risk include lawyers or resident agents establishing legal entities, the real estate sector, construction, as well as Free Trade Zones and Free Trade Zones.
The creation and use of legal persons and structures have become a tool for concealing and anonymizing corrupt practices and money laundering. Laws have been created to identify the ultimate beneficiaries and true owners of these entities, i.e., natural persons, in accordance with the demands and recommendations of the Financial Action Task Force (FATF).
Final Beneficiary Registries of legal entities have also been created to provide information to competent authorities responsible for preventing, investigating, and prosecuting these crimes. Countries that have adopted this type of registry face the challenge that, with this implementation, the high risk represented by legal entities as tools susceptible to be used for acts of corruption and, therefore, for money laundering, is mitigated.
Regarding the prosecution of corruption and money laundering through the creation and use of legal persons, most of our countries' legislations include within their legal framework criminal responsibility for the creation and use of legal entities to commit criminal acts, including corruption and money laundering offenses.
However, in practice, there is a low number of legal entities investigated, prosecuted, and therefore convicted. An important challenge for our office is to provide competent authorities with the necessary tools to guide and promote the implementation of national regulations in line with international standards and to hold legal entities accountable for their creation and/or use in the commission of corruption and money laundering offenses.
While most countries have legislation to combat these scourges, often there is a low level of effectiveness in their implementation. And this is a major challenge for our countries.
