Countries/Jurisdictions of Primary Concern - Bolivia
Bolivia is not a regional financial center, but remains vulnerable to money laundering. Illicit financial activities are related primarily to cocaine trafficking and include corruption, tax evasion, smuggling, and trafficking in persons. Criminal proceeds laundered in Bolivia are derived from smuggling contraband and from the foreign and domestic drug trade.
There is a significant market for smuggled goods in Bolivia. Chile is the primary entry point for illicit products, which are then sold domestically or informally exported to Brazil and Argentina. According to World Bank estimates, between 60 and 70 percent of the Bolivian population works in the informal economy, composed of thousands of micro-enterprises offering numerous opportunities for money laundering activities. According to the Bolivian Center for Multidisciplinary Studies (CEBEN), a local economic think-tank, the informal sector offers ample opportunity to avoid detection. In the informal sector, large amounts of money are split into smaller quantities to avoid detection and review by the financial regulatory agencies. This laundered money then enters the formal market through the financial system.
Informal currency exchange businesses and non-registered currency exchanges are illegal. There is no indication that illicit financial activity is linked to terrorism financing, though lack of proper safeguards creates a vulnerability to such activity. Much of the informal economic activity occurs in non-regulated commercial markets where many products can be bought and sold outside of the formalized tax system. Public corruption is common in these commercial markets and money laundering activity is likely.
The Bolivian financial system is moderately dollarized, with some 20 percent of deposits and 10 percent of loans distributed in U.S. dollars rather than Bolivianos, the national currency. Bolivia has 13 free trade zones for commercial and industrial use located in El Alto, Cochabamba, Santa Cruz, Oruro, Puerto Aguirre, Desaguadero, and Cobija. Casinos (hard gaming) are illegal in Bolivia. Soft gaming (e.g., bingo) is regulated; however, many operations have questionable licenses.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, micro-financial institutions, insurance companies, exchange houses, remittance companies, securities brokers, money transport companies, and financial intermediaries
Number of STRs received and time frame: 486: January 1 - October 31, 2015
Number of CTRs received and time frame: 1,985,064: January 1 - October 31, 2015
STR covered entities: Banks, micro-financial institutions, insurance companies, exchange houses, remittance companies, securities brokers, money transport companies, and financial intermediaries
money laundering criminal Prosecutions/convictions:
Prosecutions: 40 in 2014
Convictions: Not available
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Bolivia is a member the Financial Action Task Force of Latin America (GAFILAT), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.gafilat.org/UserFiles/documentos/en/evaluaciones_mutuas/Bolivia_3era_Ronda_2011.pdf
Enforcement and implementation issues and comments:
In recent years Bolivia has enacted several laws and regulations that, taken together, should help the country to more actively fight corruption, terrorism, and money laundering. The Government of Bolivia should continue its implementation of the laws and regulations with the goal of identifying criminal activity that results in investigations, criminal prosecutions, and convictions.
In May 2014, Bolivia transferred control of Bolivia’s Financial Investigative Unit (UIF) from the Financial System Supervision Authority, Bolivia’s financial regulatory body, to the Ministry of Economy and Public Finance. The government’s goal was to decentralize the UIF, giving it a greater degree of independence. However, since the move, statistics that were previously available to the public are no longer available online. Bolivia is working to rectify this issue in order to ensure statistics related to its AML/CFT regime are available to the public.
While the UIF reports to the Ministry of Economy and Public Finance, the unit has its own annual budget and significant independence. In less than two years under its new leadership, UIF has developed a program pivoting toward objectives drawn from international standards. Many of the international standards Bolivia is using as benchmarks were copied from Colombia and Mexico, two countries in the region with significant experience in the area. The UIF is receiving guidance on money laundering issues from regional partners. UIF also is working to enhance its capacities in counter-terrorism finance.
In March 2015, General Hugo Nina Fernandez, former Director of the Bolivian Special Force to Fight Drug Trafficking and former Bolivian Police Commander, was arrested on charges of money laundering. Nina Fernandez and his legal team publicly implicated other high level Bolivian officials. There have been no reported developments since March.
Bolivia does not have a mutual legal assistance treaty with the United States; however, various multilateral conventions to which both countries are signatories are used for requesting mutual legal assistance.
Bolivia should continue to strengthen its AML/CFT regime by addressing identified weaknesses.