The key challenges of AML compliance in Latin America and the Caribbean

Whether conducting risk assessments or reviewing client due diligence, it is vital to understand the risks and responsibilities of money laundering challenges for different jurisdictions.

In this article, VinciWorks considers the key AML challenges and laws in Suriname, and what organisations should consider when assessing customer, geographic or matter risk.

For more on the key AML risks and challenges in Latin America and the Caribbean, download our free guide to compliance.

Click here to download a free copy.

Key risks

• Poor regulation – Suriname is seen as a ‘money launderers paradise’ given the lack of regulations, weak institutions, low technical capacity and lack of implementation of laws. The governor of the central bank and the finance minister were charged for a slew of financial crimes for brazenly stealing $200 million.
• Corruption – Suriname has endemic corruption at all levels of government. This is the largest financial crime affecting the country and the primary source of criminal proceeds. A litany of scandals have involved ministries and political leaders. The former president was convinced of murder and drug trafficking and still pulls the strings in the current administration. Patronage is deeply entrenched. 
• Drug trafficking – Suriname is a key transit country and broker for cocaine moving from Colombia and Venezuela to Europe, particularly the Netherlands of which Suriname is a former colony. The former head of the anti-terror unit was convinced in a US court for drug trafficking and funneling the profits to Hezbollah.
• Mineral trafficking – along with gold smuggling, illegal logging and timber trafficking is a key risk. Gold is the country’s largest export, representing nearly 80% of all trade and netting more than $2 billion. Mineral trafficking is enormous given endemic corruption and non-existent regulation. Responsibility for collecting tax on gold exports was sold by the government in 2015 to a UAE-based gold company acting as a front for money launderers.
• Porous borders – frontiers with Brazil and Guyana allow for easy smuggling of illegal gold and cocaine.
• Used cars – used cars are a key method of transaction-based laundering, with cars being imported and sold on to hide dirty cash.

Criminal proceeds

An estimated $56 million – $139 million is laundered every year in Suriname,

AML policy summary

Suriname is seen as having no political will to tackle money laundering or criminality, with rampant corruption at all levels of government. 

Legal summary

Despite passing updated anti-corruption laws and having money laundering statures on the books, these are not implemented and the mandated Anti-Corruption Commission has not been established. Convicted criminals operate their enterprises with impunity from the heart of the government. 

Weaknesses

The banking sector is one of the key weaknesses in AML efforts. Banks are seen as unwilling to put compliance over profit and lack the technical knowledge and expertise to tackle money laundering. This risks Suriname being cut off from the rest of the world given its poor banking practices, keeping the economy largely cash based. 

Lawyers, notaries, and car dealers are key facilitators for money laundering. Currency exchanges are often completely unregulated, with supermarkets acting as currency dealers. Fintech, DNFBPS and the jewelry industry also present risks. The car industry and the jewelry industry refused to participate in the national risk assessment, which labeled them as key channels of money laundering. 

Drugs are trafficked wholesale in container ships, but small boats and planes are also used. Drug and mineral trafficking is undertaken in plain sight, with large container ships moving huge quantities of illegal goods. The country is considered as a black market broker, acting as a forum of exchange for wholesale buyers and sellers. 

The case of the gold export tax authority demonstrates the depth of blatant corruption in Suriname. In 2015, the government gave a private company, Kaloti Suriname Mint House (KSMH) sole authority to value and collect taxes on gold exports. A role previously carried out by the central bank. KSMG only exists on paper and is a front for a UAE money laundering operation worth billions. 

Terrorist financing remains a significant risk as well. Dino Bouterse, the former head of the Anti-Terrorism Unit, was convinced in a US federal court of conspiring to import drugs and provide material support to Hezbollah, essentially allowing Suriname to become the terrorist organization’s home base of operations. 

Strengths

A national risk assessment was completed in 2021, with support from the US Embassy in Suriname, and was submitted to the central bank. However the document is confidential and there is little hope the government will act on it. The previous government of Desi Bouterse, a convicted murderer and drug trafficker, still maintains significant influence in the new government of Chan Santhokhi, a former police chief.

More information

VinciWorks has created a guide designed to support businesses that currently operate in Latin America and the Caribbean, or are planning to, or seeking to expand to new countries in the region. This guide provides an overview of some of the key AML challenges and issues and includes a country-by-country assessment of AML risks and laws. 

Click here to download a free copy.