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2024 Financial Crime Market Outlook: Latin America and the Caribbean

In the fourth installment of our 2024 Financial Crime Market Outlook Series, we look at a vibrant and diverse region with a challenging financial crime environment: Latin America and the Caribbean. 


Persistent Corruption: An Ongoing Struggle  

According to the 2023 Corruption Perceptions Index (CPI), two-thirds of the countries in the region have a score under 50 (out of 100). The leading cause is attributed to the lack of independent judiciary systems that fail to apply the law correctly or function as a separate check for other branches of government. 

Related Resources:  

CPI 2023 For The Americas: Lack Of Independent Judiciary Hinders The Fight Against Corruption  


Reducing Crime: The Key to Economic Growth  

With a bystander status in a world increasingly shaped by geopolitical conflict and no threats of major war, Latin America and the Caribbean have caught the attention of foreign investors looking to reduce their risk exposure. However, while the region’s emerging and developing markets hold much promise, violent crime hampers the potential for foreign investment and economic growth.  

Homicide data is often considered the most representative and comparable crime indicator. In a recent study from The United Nations Office on Drugs and Crime, this region accounts for almost half of the world’s intentional homicide – despite representing just over 8 percent of the global population.  

By the same token, for the past twenty years, Central America and the Caribbean have seen an annual increase in homicide rates, averaging around four percent year over year.  

This lethal violence has long been linked to organized crime and gang-related activity as groups compete for control, particularly in Colombia, Peru, and Bolivia – the world’s largest cocaine producers. The outlook is bleak when coupled with failing judicial systems and a decrease in convictions. The region will only realize its true economic potential by prioritizing effective anti-crime measures, including prevention and addressing the root causes of crime.  


Modern-Day Slavery: Cybercrime and Migration Increase Risk  

The Walk Free Foundation describes modern-day slavery as “situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, or deception”. 

Increasingly, there is a direct link between cybercrime and forced labor, with scammers often being victims of human and labor trafficking themselves. While there has been a colorful history of uncovered scam centers based mostly in Asia, INTERPOL has reported hubs now appearing in Latin America, too. 

Likewise, with the world’s largest migration corridor stretching directly to the border of the United States, human trafficking and modern-day slavery risks are escalating. As more people migrate in the hopes of a better future, they unknowingly become increasingly vulnerable targets for these types of crimes.  

Financial institutions are captured under the United Nations Guiding Principles on Business and Human Rights (UNGPs), which established the “corporate responsibility to respect,” including the requirement to avoid causing or contributing to adverse human rights impacts and seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products, or services by their business relationships, even if they have not contributed to those impacts. 

Yet, while financial institutions are exposed to the risk of modern-day slavery through their operations, supply chains, and business relationships, they also have a critical role to play in combating it. 

"Only concerted global action can truly address the globalization of this crime trend," said Rosemary Nalubega, Assistant Director, Vulnerable Communities at INTERPOL. 

Related Resources: 

Human Trafficking 2024 - Challenges for the Financial Community  

Modern Slavery Benchmarking Tool 

Pig Butchering Scams are Spreading

FinCEN on “Pig Butchering” 

Need help managing your supply chain? Blue Umbrella delivers a suite of third-party compliance management solutions for global giants.  


Cryptocurrency: A Lifeline for Struggling Economies 

The Latin American and Caribbean market is among the top seven global cryptocurrency hubs, with strong grassroots adoption. The uptick in adoption can be credited to individuals looking for more financial control and stability in struggling economies, often prone to cycles of extreme currency deflation. 

The issue with creating a vehicle that operates outside the system is that while it can be used as a legitimate mechanism, it can provide an equally nefarious route in evading financial controls, particularly in vulnerable LAC countries with a history of corruption and extensive informal sectors.  

In fact, most major criminal organizations and gangs in the region have been reported using cryptocurrencies to exploit weak financial regulations and avoid detection. 

Of course, crypto-related risks vary by country, and while some have moved to outright ban cryptocurrency, there might be better long-term solutions that are more effective. The International Monetary Fund (IMF) has provided guidance on key elements of an appropriate policy response to mitigate the risks while also harnessing the potential benefits of the technological innovation associated with crypto assets.  

Related resources: 

2023 Global Crypto Adoption Index 

Crypto Assets and CBDCs in Latin America and the Caribbean: Opportunities and Risks 


Brazil: Leading by Example Toward Sustainability  

President Lula da Silva, elected a year ago, pledged to end deforestation by 2030 and in his first year of office, deforestation in the Brazilian Amazon rainforest decreased by 50%. 

This is in stark contrast to his predecessor, Jair Bolsonaro, who, tainted by corruption, oversaw the destruction of the rainforest surge to a 12-year high. It also serves as a beautiful reminder of what an aligned leader can do and the impact they can have on the environment.  

Another example of President Lula da Silvas’ commitment towards sustainability is Brazil taking over the G20 rotating presidency last December. The G20 is an intergovernmental forum comprised of 19 sovereign countries from five continents that work to address critical issues related to the global economy, such as international financial stability, climate change mitigation, and sustainable development.  

Brazil, Mexico, Argentina, and other LAC countries have an abundance of natural resources, some of which are the biggest global exports – and their economies will play a vital role in the global transition to net zero. A top priority for Brazil during its presidency of the G20 will be to deploy more funds into renewable energy and nature conservation projects to facilitate this transition.  

However, policies and reforms that address crime and stop the growth of transnational corruption networks are urgently needed before the region can truly become a sustainability powerhouse. 


Final Thoughts 

The concerning scores on the CPI highlight the urgent need for robust judicial reforms, while the alarming homicide rates shed light on the grim consequences of unchecked criminal activities.  

Without greater global support, it is not clear that Latin America and the Caribbean’s law enforcement and intelligence efforts can detect, detain, dismantle, and deter organized crime groups.  

2024 can mark a turning point, but it demands action, partnership, and a shared vision for a better tomorrow.  The approach must evolve (and fast) to combat financial crime in the region. 

Together, we can build a resilient future that not only withstands today’s threats but also lays the groundwork for sustainable growth and progress in the years to come. Contact us today to learn how we can help your financial institution.