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In Latin America and the Caribbean, high levels of corruption have made several countries conducive to money laundering. Weak institutions, a lack of transparency, and the influence of organized crime erode supervisory mechanisms, facilitating the flow of illicit financial resources into economic and financial systems. This combination creates an ideal ecosystem for impunity and the establishment of financial crime networks. Information is sourced from Global Financial Integrity.
The correlation between corruption and money laundering is evident when comparing two key tools: the Corruption Perception Index (CPI) by Transparency International and the Anti-Money Laundering Index (ALD) from the Basel Institute. While both indices are constructed using different methodologies, they provide a concerning snapshot of the region. The CPI measures perceptions of public sector corruption from 13 specialized sources, while the ALD Index combines data on compliance with anti-money laundering regulations, fiscal transparency, legal and political risks, and assesses anti-corruption frameworks.
Recent findings reveal that at least 15 Latin American countries are rated as highly corrupt according to the CPI 2024. This list includes Nicaragua, El Salvador, Honduras, Guatemala, Paraguay, Bolivia, Peru, Ecuador, Haiti, Trinidad and Tobago, and Jamaica, among others. Many of these also appear as high-risk in the ALD Index, confirming that corruption undermines democratic governance and facilitates large-scale money laundering.
Cases like Venezuela, Haiti, and Nicaragua clearly reflect this phenomenon. These countries, with low levels of transparency and strong links between political power and criminal structures, rank among the worst in both corruption and anti-money laundering risk. A similar situation is seen in Guatemala, El Salvador, and Mexico, where weakened institutional frameworks correspond with high scores of financial vulnerability.
However, risk is not limited to countries with the highest levels of corruption. Argentina and Brazil, despite receiving relatively better scores on the CPI, also face considerable threats in terms of money laundering. This demonstrates that regulatory failures and lack of effective enforcement of legal frameworks are also key determinants.
Another relevant point is that countries like Paraguay, Ecuador, and Peru, which have intermediate corruption indicators, maintain high money laundering risk scores on the Basel Index (90, 87, and 105 respectively). This pattern reveals that, in addition to political corruption, institutional weaknesses, opacity in asset ownership, non-autonomous financial intelligence units, and offshore structures play a critical role in the spread of these crimes.
In the Caribbean, the situation is also grim. Countries like Panama have initiated reforms, but still face serious vulnerabilities related to the use of shell companies and tax havens. Other jurisdictions like Jamaica and Trinidad and Tobago remain under scrutiny for the impact of drug trafficking on their financial systems. The Bahamas and the Cayman Islands, though not represented in all indices, have been previously flagged by the FATF for their lack of fiscal transparency.
In light of this reality, the United Nations Convention against Corruption (UNCAC) represents a key opportunity. This international instrument, ratified by Latin American countries, promotes common standards in prevention, asset recovery, and civil society participation. Nonetheless, its implementation has been uneven. Only Chile, Peru, Guatemala, and Honduras have developed transparent review mechanisms under the UNCAC framework.
The process of asset recovery, for example, remains a significant challenge. The stages of detection, seizure, and return require technical capabilities, judicial independence, and international cooperation, especially when assets are concealed through cryptocurrencies or complex financial structures.
To tackle this landscape, an urgent need for a comprehensive and coordinated approach arises. The public sector must promote inter-institutional cooperation and information sharing at both national and international levels. The private sector should implement training programs to raise awareness about corruption risks in their operations. Civil society must play an active role in monitoring and policy-making. And investigative bodies need autonomy to operate without pressure or conflicts of interest.
Without political will, transparency, and strong institutions, the fight against money laundering will continue to be an unequal battle. Corruption not only affects the economy; it undermines democracy and leaves citizens defenseless against networks that operate with total impunity.