Category: Privacy

Banking Secrecy Laws: Honduras Strengthens Financial Privacy for Users (2021)

The Honduran Congress recently amended its Penal Code, Criminal Procedure Code, and its Special Law Against Money Laundering to strengthen the financial privacy and due process rights of financial users by requiring judicial authorization for public authorities to access a person’s financial records.

The amendments, enacted during the first week of October 2021, enable the Public Ministry (Prosecutor’s Office) and the Financial Intelligence Unit (FIU) to require financial entities to provide them with the financial records of users, only by obtaining a previous court order. Further, the amendments state that the financial users’ right to Banking Secrecy can only be suspended after a judicial warrant has been secured and the exclusive purpose of investigating crimes related to money laundering, financing of terrorism, and civil asset forfeiture cases.


The Honduran Constitution recognizes the right to privacy in articles 76 and 100, as do articles 21 of the Universal Declaration of Human Rights, 17 of the International Covenant on Civil and Political Rights, 11.2 of the American Convention on Human Rights, and 10 of the American Declaration of the Rights and Duties of Man. Specifically, the Commercial Code of Honduras (1950) recognizes the right to bank secrecy in article 956 by stating:

The institutions will not be able to give news of the deposits and other operations except to the depositor, debtor or beneficiary, to their legal representatives or to whoever has the power to dispose of the account or to intervene in the operation; except when requested by the judicial authority by virtue of an order issued in a trial in which the depositor is a party, and the banking authorities for tax purposes. The officers of the credit institutions will be liable under the terms of the law for the violation of the secrecy established and the institutions will be obliged, in case of disclosure of secrecy, to repair the damages caused“.

The Commercial Code followed constitutional and international human rights law standards for due process, according to which a human right such as privacy can only be invaded under strict necessity, as authorized by law and in a proportional manner, as qualified by a competent judge through the issuance of a judicial warrant.

However, in the context of the Global War on Drugs and Terror, the Republic of Honduras was pressured to adopt constitutionally dubious invasions into the human right to financial privacy. In 2010 and 2014, Honduras enacted the Law Against the Financing of Terrorism (Decree No. 241-2010) and the Special Law Against Money Laundering (Decree No. 144-2014), respectively, both of which stated that:

“For purposes of the application of this Law, and always safeguarding the fundamental rights of the individual, the professional banking or tax the professional, banking or tax secrecy may not be invoked”.

Article 47 of Decree 144-2014 and article 53 of Decree 241-2010

These laws left financial users without any sort of privacy, as the FIU or any prosecutor could access a person’s financial records by requesting it in writing to the financial institution that held them. However, recent amendments have made Honduras one of the countries with the highest protection for banking secrecy and financial privacy.

Recent Amendments

After the amendments made in late 2021, the review of the financial records of a natural or corporate person for criminal investigations or judicial procedures can only be performed by obtaining a judicial warrant. The judge will receive the request from the prosecutor and will issue a resolution within 15 days, which will then be sent to the FIU for it to obtain the information and provide it to the court. Financial institutions are obligated to provide the requested financial information only if the request is accompanied by a warrant signed by a competent judge.

The Criminal Procedure Code was also interpreted by Congress to more clearly state that financial institutions can only provide financial information to an authority if a judicial warrant is accompanied in the request.

Interpretation of Article 274, third paragraph of the CRIMINAL PROCEDURAL CODE contained in Decree No.9-99-E, dated December 19, 1999 and its amendments, in the sense that when said paragraph states that “The officials of the institutions that are part of the of the National Financial System, must provide the corresponding authority with the information that has been requested, prior judicial order”, means that the officials of the institutions that are part of the National Financial System may only provide financial information to authorities or private persons other than the owner, if there is a a court order expressly ordering it.

Legislative Decree No. 93-2021

Advantages of Honduras Offshore Corporations

Common Law Business Entities in Honduras Próspera Special Economic Zone

Honduras is home to Latin America’s most innovative special jurisdictions, the Zones for Employment and Economic Development (ZEDE). The first Honduran ZEDE, Próspera, located in the Caribbean island of Roatán, within the Bay Islands Department of Honduras, has enacted the Roatán Common Law Code (RCLC), which allows for the incorporation of traditional common law entities, in Honduras.

The RCLC has made the American Bar Association’s Model Business Corporation Act, Uniform Business Organizations Code, Uniform Partnership Act, Uniform Limited Partnership Act, and the Uniform Limited Liability Company Act, into local Honduran law. Therefore, as an alternative for your offshore needs, Honduras offers the opportunity to create traditional common law Corporations, Partnerships, and Limited Liability Companies in what is expected to become the region’s most competitive jurisdiction for doing business.

Contact our firm to learn more about the opportunities made available by the Roatán Common Law Code of Honduras.

National Corporations (Sociedad Anónima)

Remote Incorporation (No Travel Necessary)
Interested parties need not travel to Honduras to incorporate a company. Through nominee incorporators that execute the corporate charter and bylaws, your company can be incorporate remotely.

Low Incorporation Costs
Honduras offshore corporations have very low incorporation costs. Our firm offers new company incorporations for US$400.00

Sole Shareholder Allowed
The Commercial Code of Honduras allows for the incorporation of companies with a single shareholder.

Electronic Shareholder and Board of Directors Meetings
The Shareholder Assemblies and Board of Directors sessions may be convened by electronic mail (email) and held by electronic means such as Skype, Zoom, or Teams. The shareholder and board minutes book, as well as the shareholder registry book, may be kept in electronic format, without having to notify or get authorization from any governmental agency.

Electronic Accounting in IFRS
Corporate accounting must be done in accordance with the International Financial Reporting Standards (IFRS) and the accounting books may be kept electronically, without the need to notify or get authorization from any governmental agency.

Electronic Signatures
Honduras recognizes the legal validity of electronic signatures and data messages for commercial purposes, allowing the corporation to contract internationally through electronic means.

Very Low Maintenance Costs
There is no annual corporation or franchise tax, no annual reports, nor registered agent fees. However, a corporation must maintain a fiscal domicile in the country, which our firm offers for an annual cost of US$360.00

No Need to Deposit or Pay Registered Capital
The registered capital for the corporation does not need to be paid or deposited when the incorporation is done through the simplified incorporation mechanism contained in the Law for the Generation of Employment.

Foreign Sourced Income is Not Taxable
Since the new Tax Code came into effect in 2017, the tax system of Honduras is governed by the territorial source principle. This means that any income obtained from operations outside of Honduras is not taxable.

5-Year Tax Exemptions
If the corporation will operate locally, a 5-year exemption on income taxes, municipal taxes, and administrative fees can be obtained if the shareholders are natural persons. The process usually takes one month and has a total cost of US$650.00

Fast Incorporation
The incorporation of a Honduran company usually takes between 3-5 business days.

Shareholder Privacy
When nominal shares are issued, the identities of shareholders are kept confidential and registered only within private company books, without the need to register them in the Public Merchant’s Register. However, bearer shares are also allowed.

Bearer Shares
The Commercial Code of Honduras allows local corporations to issue bearer shares, making Honduras one of the few countries in the world that can guarantee complete privacy of the shareholders. The bearer shares are not subject to guardianship or custodianship regulations.

Honduras is Not Black or Gray-listed as a Tax Haven.
Though providing ample tax advantages and complete shareholder privacy as an offshore jurisdiction, up to 2021 Honduras is not listed in the European Union’s (EU) List of Non-Cooperative Jurisdictions for Tax Purposes, nor in the Organization for Economic Cooperation and Development’s (OECD) List on Uncooperative Tax Havens.

No Nationality Restrictions.
Persons or companies from any nation or territory may participate freely in the share capital of Honduran corporations.

No currency exchange controls.
A Honduran corporation can open local bank accounts in US Dollars and there are no currency restrictions for transferring abroad.