Peru – Know Your Customer (KYC) Rules

 

 

Peru is not a major regional financial center, nor is it an offshore financial center. Peru has the world‘s highest potential production of pure cocaine and the second highest potential production of export quality cocaine. Money laundering is often used as a tool to integrate significant illegal earnings from drug trafficking into the Peruvian economy. As the Peruvian economy has grown, financial crimes have also increased.

The most common methods of money laundering in Peru involve real estate sales, casinos, business investments, high interest loans, construction, export businesses, hotels, and restaurants. Other factors which facilitate money laundering include Peru‘s cash-based and heavily dollarized economy, a large informal sector, pervasive corruption, and deficient regulatory supervision of designated non-financial businesses and professions (DNFBPs), such as the informal money exchange and wire transfer services. A large black market for pirated and smuggled goods exists. Corruption remains a serious concern.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Peru – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Peruvian Law:

    • Banks
    • Insurance companies
    • Stock funds and brokers
    • Stock and commodities exchanges
    • Credit and debit card companies
    • Money exchange houses
    • Mail and courier services
    • Travel and tourism agencies
    • Hotels and restaurants
    • Notaries
    • The customs agency
    • Casinos
    • Auto dealers
    • Construction or real estate firms
    • Dealers in precious stones and metals

Peru – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 1,650 from January to September 2011

Number of CTRs received and time frame: 2.57 million from January to September 2011

The following is a list of STR covered entities covered by Peruvian Law:

    • Banks
    • Casinos
    • Investment houses
    • Dealers of arms, antiques, vehicles, precious metals and stones
    • Warehouses
    • Construction and real estate firms
    • Financial and insurance companies
    • Travel agents
    • Import and export agents
    • Credit card companies
    • Courier and postal services
    • Money lenders and money exchanges
    • Customs
    • Mining companies
    • Manufacturers and dealers of explosives or chemical components used in drugs and explosives
    • Public entities that receive funds from other than the national treasury

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: 159 from 2002 to July of 2011
Convictions: 13 from 2009 to 2011

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In May 2011, with donor support, the Government of Peru (GOP) announced a ―National Plan to Combat Money Laundering and Terrorist Financing‖ (National Plan). The GOP expressed its commitment to implement this National Plan and to close cooperation with the United States to fight money laundering and financial crimes.

Casinos are a serious money laundering concern. Much of this concern originates in the gaming industry‘s oversight authority. The Ministry of Foreign Commerce and Tourism (MINCETUR) regulates casinos. Although MINCETUR is a participant in the National Plan, provides information to the FIU, and requires that casinos report suspicious transactions, oversight and enforcement of anti-money laundering regulations remain weak. Casinos do not generate currency transaction reports, and there are no restrictions on cash-to-cash, cash-to-check, or cash-to-wire transfer transactions in casinos.

Informal remittance businesses remain unsupervised and vulnerable to money laundering. These businesses include travel agencies and small wire transfer businesses. Peru should expand supervision and regulation of financial institutions and DNFBPs.

Peru‘s bank secrecy law remains a primary obstacle to effective investigation and enforcement. A number of bills under review in the Peruvian Congress would, if enacted, lift bank secrecy provisions and allow the FIU to access all financial transactions in a timely fashion. The National Plan emphasizes the importance of adopting this legislation so the FIU would have greater access to information that is currently not available to it because of banking and tax secrecy laws.

Depending on the predicate offense, specialized prosecutors from the Public Ministry‘s Coordinating Office on Organized Crime or Office on Drug Trafficking are responsible for dealing with the majority of money laundering cases. Out of the 1,650 STRs filed with the FIU from January to September 2011, 54 financial intelligence reports including 114 STRs were submitted to the Public Ministry. The prosecutorial system for financial crimes needs improvements in investigative and prosecutorial capacity, and presentation of investigative results to prosecutors, including writing investigative results in clearer language. Prosecutors claim they cannot understand the format or language of many of the FIU‘s investigative results, and the 120-day time frame for prosecutors to investigate results is insufficient. Compounding the problem, many judges have not received sufficient training to manage the technical elements of money laundering cases, and banks often delay providing information to judges and prosecutors. Convictions tend to be for lesser offenses such as tax evasion, which is to prosecute successfully.

Although any form of collaboration with terrorism, including economic collaboration, is criminalized, the GOP has not established terrorist financing as a crime under Peruvian legislation in a manner that conforms to international standards. Peru does not have the ability to freeze terrorist assets without delay.

In April 2011, the U.S. Financial Crimes Enforcement Network suspended the exchange of information related to money laundering and terrorist financing with the FIU because of a leak of sensitive information the Peruvian press later published. The FIU and the Peruvian government are working to reestablish the relationship with FinCEN.