Financial Crime World

Financial Crimes Soar in Peru, Wreaking Havoc on Small Businesses and Society

===========================================================

A Disturbing Trend: Extortion Cases Surge by 370%

LIMA, PERU - In a disturbing trend, financial crimes have skyrocketed in Peru over the past two years. According to reports, extortion cases have increased by a staggering 370% between 2021 and 2023. The devastating impact is being felt across the country, with small business owners, particularly those operating “bodegas”, bearing the brunt of the crisis.

The Impact on Small Businesses

Entrepreneur Julián’s fruit shop in Lima’s suburbs was among those targeted by extortionists. He received daily threats via WhatsApp, demanding he pay a “protection fee” or face dire consequences. Despite reporting the incidents to the police, Julián felt forced to sell his business and relocate out of fear for his safety.

Extortion: A Growing Concern

According to Peru’s Attorney General’s Office:

  • The number of reported extortion cases has jumped from 4,761 in 2021 to 22,396 in 2023.
  • The trend is continuing into 2024, with authorities capturing between four and five criminal gangs linked to extortion every week in Lima alone.

Victims: Small Business Owners and Vulnerable Communities

The majority of victims are small business owners who are often forced to:

  • Pay a “protection fee”
  • Borrow money from loan sharks at exorbitant interest rates

Many have been extorted or threatened by criminals, with at least five bodegueros killed in extortion-related conflicts, according to the National Association of Bodega Owners.

The Financial Toll

The financial toll is staggering:

  • About half a million people in Peru carry debt.
  • Over 1.2 million Venezuelan migrants living in Peru are vulnerable to predatory lending.

The most common reason borrowers seek out loans is to pay off other debts.

Experts Warn of Economic Implications

Experts warn that extortion has significant economic implications, controlling entire industries and supply chains, and can lead to violent crime:

  • “Extortion is not just about shaking down business owners for weekly or monthly protection money,” said Chris Dalby, director of World of Crime. “It’s also controlling entire industries, monopolizing them, and extorting every single player in the supply chain in a very coordinated way.”

Authorities Face Challenges

The authorities face significant challenges in combating extortion, with many victims too afraid to report crimes due to fear of retaliation:

  • According to General Marco Antonio Conde Cuellar, director of criminal investigation at the Lima Police Department: “Victims get so scared that they don’t even want to make a formal complaint.”

A Regional Issue

Peru is not alone in grappling with financial crime. Neighboring countries such as Chile and Ecuador are also struggling with similar issues.

The COVID-19 Pandemic’s Exacerbating Effect

The COVID-19 pandemic has exacerbated the problem, creating an environment in which criminal groups see extortion as a lucrative way to survive.

Urgent Action Needed

Research has shown that debt is a common cause of migration across the Americas, highlighting the need for urgent action to address the root causes of financial crime and support vulnerable communities.