Financial Crime World

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Money Laundering in Ecuador: An Analysis of Cases and Consequences

Abstract

Money laundering is a serious crime that affects not only individuals but also the economy of a country as a whole. In Ecuador, this offense has been on the rise, with significant consequences for the public sector and private businesses.

Introduction

Money laundering is the process of disguising the origins of illicitly obtained funds to make them appear legitimate [Andrade 2009]. This crime has serious consequences for economies worldwide, including Ecuador. According to the Internal Revenue Service (SRI), between January 1 and March 17, 2017, a total of $218,683,774 was recovered from purchases made to companies suspected of money laundering in Ecuador [SRI 2017].

Case Analysis

Our analysis of judgments on cases of money laundering in Ecuador reveals that foreigners have a greater involvement in these operations, with a participation rate of 52%. This lack of rigorous requirements for accepting foreign nationals entering the country has facilitated this increase. Furthermore, our study indicates that the majority of individuals involved in money laundering are male (74%), and those who enter higher sums of money into the country are also predominantly male.

Methods Used to Launder Money

The methods used to launder money have evolved over time, with individuals reinventing ways to disguise their illicit funds. One common method is the creation of businesses and shell corporations that serve as a front for laundering money [Eslava 2013]. Additionally, international airports in Ecuador’s largest provinces are often used as entry points for large sums of money.

Regulatory Agencies

The Superintendency of Banks and Securities (SBS) is responsible for regulating and monitoring financial transactions to prevent money laundering. However, up to 2016, a total of 508 registered shell corporations were found nationwide, indicating that more needs to be done to combat this crime [SRI 2017].

Key Points

  • Foreigners have a greater involvement in money laundering operations (52%).
  • The majority of individuals involved in money laundering are male (74%).
  • Shell corporations and international airports are often used as entry points for illicit funds.

Conclusion

Money laundering has significant consequences for Ecuador’s economy and its inhabitants. It is essential to create a culture of prevention to address this issue effectively. Regulatory agencies must work together with other institutions to prevent the entry of illicit funds into the country.

References

  • Andrade, R. (2009). Money laundering in Latin America: A review of the literature. Journal of International Business and Economy Research, 8(1), 45-64.
  • Eslava, J. (2013). Money laundering: An overview of its methods and detection techniques. International Journal of Business and Social Science, 4(12), 24-35.
  • GAFILAT. (2017). Latin American financial action task force. Retrieved from http://www.gafilat.org/content/quienes/
  • SRI. (2017). Internal Revenue Service. Retrieved from https://www.sri.gob.ec