Latin America has recorded tremendous progress in its fight against money laundering. Major anti-corruption operations have turned to financial intelligence over the last ten years to advance in AML. The progress recorded has seen them handle swiftly Brazil’s Lava Jato and its subsequent Odebrecht investigations in several countries. It has also helped them prosecute high-ranking officials in Guatemala, making Latin America more capable to gather information and tackle suspicious activities.
AML in Latin America is now welcoming a new threat in politics as its two largest economies, Mexico and Brazil proceed into the political arena. The political use of financial intelligence may bring short-term gains for AML institutions and some currently in power. Yet if not controlled, it will prove disastrous for the rule of law over the long run.
AML landscape in Mexico was swept under the carpet under President Andrés Manuel López Obrador. Heads of AML agencies are usually inconspicuous bureaucrats, but the UIF director, Santiago Nieto Castillo, now receives more media attention than most Mexican ministers.
Meanwhile, draconian laws on tax fraud saw the light in Mexico, making it a national security offense. Under AMLO, the UIF led several actions against high-profile targets — from former Pemex president Emilio Lozoya to Supreme Court Justice Eduardo Medina Mora. The president lauded these operations as proof of his seriousness about fighting graft, evidence of corruption abounded in some cases.
Brazil’s financial intelligence unit, COAF, has exhibited a serious part in all major anti-corruption investigations since, including Lava Jato. One senior prosecutor argues that a central bank should not be in charge of AML and COAF’s new structure could increase possible conflicts of interest. “We went through all these political fights and I fear that the result could be a weaker COAF.”
So how can Mexico, Brazil and others in the region control political interference in AML?
One critical step is to make countries adopt international standards and collaborate with bodies such as the Financial Action Task Force (FATF) and the Egmont Group, which congregate financial intelligence units from across the world.
Latin America’s progress in AML is ignited by stronger democracies and institutions propelled. These elements will continue to be essential for financial intelligence in the age of cryptocurrencies, encrypted messages and new forms of bank secrecy.