According to a Peruvian investigative journalism news source, more than USD 2.2 billion linked to suspected criminal activities has entered Peru’s financial system since 1998 through clients with alleged ties to corruption, drug trafficking, illegal gold mining, and tax evasion. Two of the country’s largest banks reportedly did no respond to questions regarding their client acceptance process, referring to financial secrecy laws. Peru’s Financial Intelligence Unit, La Unidad de Inteligencia Financiera, (UIF) showed a list of banking clients with checkered pasts, and included individuals and companies including on United States sanctions and watchlists.
The investigation revealed inaction by Peru’s oversight entity of insurance and pension funds, La Superintendencia de Banca, Seguros y AFP (SBS) and brought to light instances of noncompliance with regulations intended to prevent money laundering. Recently, Americn and European governments and regulatory entities have filed criminal charges or sanctions, in some cases, for billions of dollars against banks associatied with money laundering or failing to comply with regulations. While the Peruvian government has passed legislation giving the SBS authority to fine institutions for banking irregularities, in order to prevent money laundering, the highest fines pale in comparison to other countries and international regulatory agencies.
Acording to the investigation, the cases revealed major Peruvian banks ran operations which revealed deficiencies in their anti-money laundering systems, particularly, failing to take into account high-risk customer status and address ties to criminal groups. An analysis of client profiles and suspicious acitivities revealed Latin American drug trafficking figures, who purportedly laundered their gaines through real estate, transportation, and currency exchange businesses in Lima.
One other deficiency identified in Peruvian banks was the failure to file suspicious activity reports in required fashion. According to the investigation, there were hundreds of cases in which Peruvian banks notified the UIF of suspicious activitiy well after the required deadline of 30 days, with the average delay lasting four months, and in some cases, lasting as long as five years. In addition, Peruvian banks reportedly demonstrated a tendency to warn their clients and gave them the opportunity to explain themselves after irregularities were detected. Some of these individuals moved significant sums despite no employment or financial history and resided in poor neighborhoods or informal settlements.
Finally, the failure of institutions to conduct appropriate due diligence on not just its customers, but its employees stood out as a significant problem. Analysis revealed employees from high-risk regions were hired, some of them maintaining ties to organized crime. It is important for all financial institutions to scrutinize hires entering sensitive positions, particularly given the capability of some criminal syndicates to penetrate the financial system.