Financial Action Task Force of Latin America identifies uneven proliferation financing controls and urges stronger detection and supervision

The Financial Action Task Force of Latin America (GAFILAT) has published a regional risk assessment and reference guide identifying gaps between proliferation financing laws and their implementation. Although the region’s direct exposure to weapons of mass destruction proliferation is assessed as low to moderate, incomplete export controls, uneven sectoral supervision and limited operational coordination leave channels open to sanctions evasion. The report prioritizes completing national proliferation financing risk assessments and putting existing controls into practice as part of preparations for the fifth round of mutual evaluations. The assessment draws on survey responses from 16 jurisdictions, supplemented by mutual evaluations and other sources. Fourteen respondents reported legal frameworks for United Nations targeted financial sanctions, but 12 reported no suspicious transaction reports related to proliferation financing and 14 reported no investigations in the preceding 10 years. These findings do not establish an absence of risk, given potential detection weaknesses and sophisticated evasion techniques. Financial institutions face the greatest exposure but have more developed controls than other sectors. Reliance on sanctions list screening remains insufficient because designated parties can conceal their involvement through shell companies and intermediaries. Maritime activities and free trade zones create additional vulnerabilities through transit, transshipment and reexportation, while supervision of virtual asset service providers has lagged behind regulatory development. The recommendations center on risk assessment, detection and coordination, alongside stronger sectoral controls. National assessments should at least address risks of breaches, nonimplementation or evasion of targeted financial sanctions under Financial Action Task Force standards. Authorities should establish specific reporting channels and feedback mechanisms, improve financial intelligence units’ access to customs and trade data, and connect export control authorities with financial crime agencies. Financial institutions should supplement screening with analysis of trade activity and customer behavior. Other priorities include stronger ownership transparency and oversight in free trade zones, due diligence in ship registration, and supervision and training for vulnerable nonfinancial businesses and virtual asset service providers, including measures addressing exposure through foreign providers.