El Salvador

New Documents

U.S. Vice President Joe Biden issued a joint statement with the presidents of El Salvador, Guatemala and Honduras concerning the fight against transnational criminal organizations, economic challenges and security issues.

The Organisation for Economic Co-operation and Development’s Global Forum on Transparency and Exchange of Information for Tax Purposes evaluated El Salvador’s regulatory framework for tax transparency and concluded that the country has an overall rating of largely compliant.

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Important Facts

  • The U.S. State Department labels El Salvador as a major money laundering country. In 2020, the country's Attorney General’s office led efforts to make significant progress in combating money laundering. However, poor regulatory anti-money laundering (AML) and counterterrorist financing (CTF) oversight and enforcement results in financial crime vulnerabilities, particularly with respect to designated non-financial businesses and professions (DNFBPs). El Salvador's dollarized economy and geographic location make it an ideal haven for transnational organized crime groups, including human smuggling and drug trafficking organizations. Money laundering in El Salvador is primarily related to the proceeds of illegal narcotics trafficking, human trafficking, extortion, tax evasion and corruption. Organized crime groups misuse front companies, travel agencies, remittances, the import and export of goods, and cargo transportation to launder illicit funds. Common methods also include the use of smurfing operations, whereby small amounts of money are deposited or transferred in a specific pattern to avoid detection by government authorities, often in connection with narcotics activities in Guatemala. Also, the free movement of citizens across borders with Guatemala, Honduras and Nicaragua creates a vulnerability for the cross-border movement of contraband and illicit proceeds of crime. Due to a lack of regulation, accountants, auditors, casinos, pawn shops and other DNFBPs do not file suspicious activity reports. The State Department highlights that in 2020, criminal charges were filed in several high-profile money laundering cases, including charges against the former president of the legislative assembly Sigfredo Reyes.
-Source: 2021 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i

Technical Effectiveness
Compliant : 10 High :
Largely Compliant : 12 Substantial :
Partially Compliant : 18 Moderate :
Non-Compliant : 9 Low :

BASEL i

Rank : 86/141
Score : 4.87/10

TRANSPARENCY INTERNATIONAL i

Rank : 113/180
Score : 34/100

Tax Justice Network i

Rank : 85/133
Score : 64/100