FATF status

Honduras is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 16 February 2012

The FATF welcomes Honduras’ significant progress in improving its AML/CFT regime and notes that Honduras has largely met its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Honduras is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Honduras will work with CFATF as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, and further strengthen its AML/CFT regime.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Honduras was undertaken in 2020. According to that Evaluation, Honduras was deemed Compliant for 18 and Largely Compliant for 14 of the FATF 40 Recommendations. It remains Highly effective for 1 and Substantially Effective for 2 of the Effectiveness & Technical Compliance ratings.

Corruption in Honduras significantly hinders investment, affecting various sectors such as government procurement, real estate, and the judiciary. Despite the existence of legal frameworks and international conventions aimed at combating corruption, enforcement remains weak, leading to widespread impunity and a culture where bribery is commonplace. The Castro administration is currently negotiating with the UN to establish a commission to address these issues, highlighting the ongoing challenges faced by both local and international businesses.

Honduras has a diverse economy with significant contributions from agriculture, industry, and services, but it faces challenges due to government policies that create uncertainty for investors. Despite its competitive advantages, including proximity to U.S. markets and a skilled labor force, many businesses report difficulties in accessing foreign currency and navigating a complex regulatory environment, which has led to a decline in the investment climate. Recent agreements with the IMF and infrastructure projects aim to stimulate growth, yet concerns about energy costs and political stability persist.

Honduras presents a mixed investment climate, characterized by significant competitive advantages such as proximity to U.S. markets and a skilled labor pool, yet marred by considerable uncertainty stemming from government policies and legislation. Investors have reported challenges in accessing U.S. dollars due to strict regulations from the Central Bank, alongside concerns over potential expropriation and unreliable electricity supply. While the government has made efforts to streamline business processes and support small-scale farmers, the overall perception among business leaders is that the investment environment has become increasingly difficult.