Financial Crime World

Financial Crimes on the Rise in Peru: Loan Sharking and Extortion Gangs Thrive Amid Economic Crisis

Peru is facing a surge in financial crimes, with loan sharking and extortion cases skyrocketing due to economic vulnerability and competition among criminal groups. According to the Attorney General’s Office, reported extortion cases increased by 370% between 2021 and 2023, reaching over 22,000 cases.

The Rise of Gota-a-Gota Loans

Gota-a-gota loans, which involve loan sharks charging exorbitant interest rates, have been a major contributor to the surge in financial crimes. These types of loans accounted for six times as many complaints filed with the Interior Ministry’s complaints platform as all other forms of extortion in 2023.

  • Over 500,000 individuals in Peru rely on gota-a-gota loans to make ends meet.
  • Gota-a-gota loans are particularly prevalent among vulnerable populations, such as migrant communities.

Venezuelan Migrants: Easy Prey

Venezuelan migrants, who number around 1.2 million in Peru, are particularly susceptible to exploitation by loan sharks due to their limited access to formal financial institutions. Key statistics include:

  • Nearly 50% of Venezuelans in Peru lacked bank accounts in September 2022.
  • Just 5% had received credit from formal financial institutions.

High-Profile Arrests

In March 2024, authorities in Lima dismantled a Venezuelan-Colombian gota-a-gota gang with 20 members and seized illegal weapons and explosives. This move has sent a strong message to criminal groups operating in the country.

Factors Contributing to the Crisis

A combination of factors contributes to the rise in financial crime, including:

  • Peru’s economic situation: The country took a severe hit from the COVID-19 pandemic and has struggled with its recovery.
  • Challenges posed by foreign criminal organizations: Colombian and Venezuelan gangs are playing a significant role in the rise of financial crimes.
  • A cap on interest rates for business and consumer loans set by Congress in May 2021, making it less likely for people to obtain formal loans.

The Way Forward

As Peru grapples with its economic crisis, it is crucial that authorities take decisive action to combat loan sharking and extortion. The country’s vulnerable populations, particularly migrant communities, must be protected from exploitation by criminal gangs.