Financial Crimes on the Rise in Peru: Desperation Drives Loan Sharks and Extortion

Peru is facing an unprecedented surge in financial crimes, with extortion cases skyrocketing by 370% between 2021 and 2023. The Attorney General’s Office reported a staggering 22,396 cases of extortion in 2023 alone, up from just 4,761 in 2021.

Causes of the Surge

• Gota a Gota Loans: Predatory loans demanding exorbitant interest rates have become rampant, with six times more reports made to the Interior Ministry’s complaints platform than all other forms of extortion combined.
• Financial Desperation: Around 500,000 people in Peru owe gota a gota loans, according to credit organization FEPCMAC. Borrowers often seek these loans to pay off other debts, and those lacking residency status or working informally are particularly vulnerable to exploitation.

The Impact

• Venezuelan Migrants: Almost half of Venezuelan migrants living in Peru are unbanked, with only 5% able to access credit from formal financial institutions. They are disproportionately affected by gota a gota loans.
• Peruvians: Poverty is predicted to reach its highest level since 2010 due to the COVID-19 pandemic’s impact on the country.

The Role of Foreign Competition

• Colombian and Venezuelan Groups: Colombian groups facing challenges from recently arrived Venezuelan gangs may seek alliances with existing groups before attempting to take control of the market.
• The Tren de Aragua: A transnational Venezuelan mega-gang has reportedly taken over gota a gota operations in at least one part of the country, exploiting members of the Venezuelan diaspora.

The Cap on Interest Rates

• Approved by Congress in May 2021: The cap on interest rates has made it less likely for banks to grant loans, driving desperate individuals into the hands of extortionists.