Trade and Commercial Law Assessment - Honduras - Economic ...

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS The former law on money laundering reached only the proceeds from drug-trafficking and certain listed crimes. Under the new law, “money and asset laundering” have been extended to “income or assets resulting from illegal activities or which lack economic foundation or legal support for possession.” (Article 2 (9)). The new law creates the National Bank and Insurance Company Commission (“the Commission”). The Commission supervises state and private banks, financing partnerships, savings and loan associations, general deposit warehouses, stock markets, insurance companies, and public and private pension funds. The law also creates the Unidad de Información Financiera (UIF), or Honduran Financial Information Unit (“FIU”). Banks and other financial institutions are required to report to the FIU, which in turn is responsible for forwarding suspicious transactions to prosecutors and police for investigation. 2. Implementing Institutions The Ministry of Security: The Minister of Security oversees the National Police, which took over internal security from the military. When the police and the military were separated, some members of the military joined the police force. Not only does Honduras have relatively little experience in operating a police force but also that experience has been influenced by a military mind-set. Moreover, it is well known that members of both the police and the military are involved in perpetration and protection of criminal operations. The current Ministry of Security, appointed by the President, appears to be dedicated to attacking corruption. He is apparently aware that, of the four departments under his authority, several are riddled with corruption. The Special Services Unit, however, is apparently reliable and well trained, including in matters of money laundering. The minister supports the Special Services Unit, which works in cooperation with the Organized Crime Unit of the Public Ministry. The Public Ministry: The Public Ministry is headed by the Fiscal (Attorney) General, who is appointed by the President of the National Congress. The ministry has responsibility for prosecution of crimes. The Director of the Organized Crime Unit within the ministry prosecutes money laundering and related crimes. By all accounts, the current director of this unit has been extremely aggressive and very successful in prosecuting corruption. She has prosecuted police, customs officials, military, and public officials. Although prosecutions have encountered difficulties in the courts, and the numbers are still relatively small, the situation is a vast improvement over 2000, when the DEA report noted that there had not been even one successful prosecution. According to current information supplied by the Honduran Embassy, there have been six convictions and 300 seized automobiles. The Director of the Organized Crime Unit has been very visible in the media. While this is a common tendency among prosecutors everywhere, in Honduras the practice may put pressure on XIII-2
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS the courts, which might otherwise obstruct a prosecution. That this strategy should be considered necessary and effective reflects the weakness of the rule of law in Honduras. The Courts: The role of, and problems associated with, the Honduran courts has been discussed throughout this document. As indicated in the section on the Public Ministry, the prosecution of money laundering has encountered difficulties in the courts. Although one does not expect the courts to be rubber-stamps for the prosecution, the well-known corruption within the judiciary would seem to play a part in the difficulty of prosecuting money laundering. The National Bank and Insurance Company Commission: The National Bank Insurance Company Commission’s supervisory role concerning financial institutions is detailed under the financial crimes law, as quoted in the next paragraph. Apparently, the commission is considering new legislation to reform the existing reform legislation. It is said that the proposed changes would give the commission more independence; however, the Superintendent of the Commission seems concerned that the details of regulating financial institutions should not be mixed in with criminal matters, but should be placed in the statutes on criminal law and procedure. The current financial crimes law places the following requirements and restrictions on financial institutions: ♦ They cannot open deposit accounts with false names, or coded names, or of any other modality that conceals the identity of the holder. ♦ They will fully identify all depositors, and customers in general, maintaining updated registries of personal documents and information on each of them. ♦ When there is doubt as to whether a customer is or is not acting on his or her own behalf, they will adopt reasonable measures to obtain and conserve information on the identity of the persons for whom the account is opened, an international transfer is made, or a transaction is carried out. Special vigilance will be exercised in cases involving organizations that do not carry out commercial, financial, or industrial operations within the national territory. ♦ They will maintain during any operation, and for at least 5 years after finalization of the transaction, registries of the information and documentation required. ♦ For at least 5 years after the transaction is concluded, they will maintain registries that allow reconstruction of any financial transaction that exceeds the amounts established by the Central Bank of Honduras. ♦ They will submit to the remaining regulations imposed on them by the financial crimes law and the regulations established by the Central Bank of Honduras and the National Bank and Insurance Company Commission. XIII-3
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