Financial Crime World

Money Laundering Techniques on the Rise in Ecuador

Ecuador has seen a significant surge in bulk cash smuggling over the past five years, with authorities seizing millions of dollars in illicit funds. According to figures from El Comercio, security forces seized $545,000 in 2008, rising to $1.9 million and 215,000 Euros by 2012.

Cash Smuggling on the Rise

Police have arrested 79 individuals for cash smuggling at Quito and Guayaquil airports during this period, but only six convictions were secured while 18 people were acquitted and 28 cases were dismissed. Officials estimate that for every one person caught, five more successfully cross the border.

The legal challenges faced by prosecutors in Ecuador have hindered efforts to combat money laundering. The laws governing the illicit origins of funds are poorly defined, leading to inconsistent interpretations by judges.

  • One notable case involved three Ecuadoreans who were arrested at Quito airport in 2011 with 180,000 Euros each hidden in their crotches. They were initially convicted of money laundering but had their conviction overturned on appeal after the court ruled that prosecutors had not adequately proven the origins of the cash.

Methods Used by Criminal Organizations

The majority of seizures are made at airports, but police believe that most cash smuggling occurs through land and maritime borders, where it is more difficult to monitor crossings. According to US law enforcement agencies, criminal organizations have turned to bulk cash smuggling as a result of the crackdown on money laundering operations through established financial institutions.

Methods Used by Criminal Organizations

  • Bulk shipments in commercial vehicles: This involves transporting large amounts of cash in commercial vehicles, often with fake documentation.
  • The “ruta hormiga” or “ant route,” which involves breaking down cash shipments into smaller amounts carried by individuals before reconsolidating them on the other side.

Transit Routes

Cash smuggling routes often follow the same paths as drug trafficking but in reverse, using the same personnel, contacts, and infrastructure. The most popular route is crossing the Mexico-US border, where estimates of cash smuggled vary wildly from $6 billion to $36 billion a year.

Transit Routes

  • Mexico-US border: This is the most popular transit route, with estimates of cash smuggled ranging from $6 billion to $36 billion a year.
  • Colombia and Ecuador: Evolutions in both drug trafficking and money laundering are popularizing other transit routes through these countries.

Response by the United States

The United States has responded to the growth in cash smuggling with stronger legislation, including the 2001 Patriot Act, which criminalized international bulk cash smuggling for amounts over $10,000. The Immigration and Customs Enforcement agency (ICE) established the National Bulk Cash Smuggling Center, which seized over $500 million and arrested over 1,300 people from 2003 to 2010.

Challenges in Combating Cash Smuggling

However, while cracking down on cash smuggling may disrupt cartels’ revenue streams, it leaves their operational capacity barely touched. The cartels continue to evolve, using new money laundering techniques that focus on opportunities in a high-tech and connected world, underscoring the Sisyphean nature of stopping the flows of drugs and cash.