Banker's Academy AML Training by Country

Anti Money Laundering (AML) By Country: Bolivia

Anti Money Laundering (AML) in Bolivia

Bolivia is a major drug-transit and drug producing country, making money laundering a significant and growing issue. The majority of money laundering in Bolivia is related to the smuggling of contraband, public corruption and narcotics trafficking. Bolivia criminalizes money laundering in a 1997 Law which modifies the country’s Penal Code. The Law contains categories of predicate offenses, including narcotics trafficking, organized criminal activities and public corruption. It also provides for a penalty of one to six years of imprisonment for money laundering, carries heavy fines and defines the use of asset seizure beyond drug-related offenses.

Under the 1997 Law, Bolivia’s Financial Intelligence Unit (FIU), the Unidad de Investigaciones Financieras (UIF) was established. The UIF did not become fully operational until 1999. The responsibilities of the UIF are collecting and analyzing data on Suspicious Transaction Reports (STRs) and forwarding cases that warrant further information to the Public Ministry. Bolivia requires that all financial institutions identify their customers and incorporate a Know Your Customer (KYC) policy when conducting transactions. Financial institutions are required to maintain a record of all transactions for a minimum of ten years and to report all suspicious transactions to the UIF.

In an effort to combat narcotics related money laundering, Bolivia created the Special Group for Investigation of Economic Financial Affairs (GIAEF) in 2002. Bolivia is a member of the Financial Action Task Force for South America (GAFISUD), an organization working towards developing and implementing a comprehensive global strategy to combat money laundering and terrorist financing as set out in the Financial Action Task Force's Forty Recommendations on Money Laundering and the Financial Action Task Force’s Nine Special Recommendations on Terrorist Financing.

The Economy of Bolivia

Although Bolivia is full of many natural resources, including tin, silver and natural gas, it continues to remain one of the least developed and poorest countries in Latin America. A considerable amount of Bolivians make a living through the illegal growing of coca, which is the main source of cocaine. Legal resources that greatly contribute to the economy include coffee, cotton, soybeans, corn, rice, sugarcane and potatoes.

In order to reduce its large external debt, in 2001, Bolivia reached the completion point of the International Monetary Fund (IMF) and World Bank's Heavily Indebted Poor Country (HIPC) debt relief initiative, becoming only the second country to do so. Total debt-service relief under the HIPC initiative amounted around $2 billion. In recent years, the Bolivian government has been pursuing policies aimed toward poverty reduction and the stabilization of the financial system.

Banking in Bolivia

Established in 1928, The Banco Central de Bolivia (BCB) is the country’s central bank. The BCB majorly influences Bolivia’s economy by controlling the fiscal and monetary sectors.

The BCB’s main responsibilities are issuing the national currency and monetary policy, controlling the money supply, regulating foreign exchange and maintaining overall economic stability. The BCB is also striving to improve the capacities of its services and management that is offered to internal and external customers. The BCB is accelerating the rate of devaluation in order to avoid a sudden currency collapse, such as the one that occurred in Argentina.

Currency in Bolivia

The Boliviano (BOB) is the national currency of Bolivia. Bolivianos are divided into 100 subunits of coins, called centavos. Centavos come in denominations of 10, 20 and 50, which are less than the value of one boliviano. Banknotes are issued in denominations of 10, 20, 50, 100 and 200 Bolivianos and in coins of 1, 2 and 5.