Financial Crime World

Money Laundering Techniques and Methods in Ecuador Exposed

Introduction

Ecuador’s struggle to combat money laundering is hindered by several factors, including its adoption of the US dollar, a booming drug market, and structural issues within its financial system. This article will explore the main techniques and methods used for money laundering in Ecuador.

The Scope of Money Laundering in Ecuador

  • According to a new study conducted by the Ecuadorian Observatory of Organized Crime (OECO), money laundering is the second-most prevalent crime in the country after drug trafficking.
  • Research found that certain economic activities, including:
    • Construction
    • Real estate
    • Online gambling are frequently used by money launderers.

The Main Driver of Money Laundering in Ecuador

Large-scale drug trafficking has led to a significant increase in capital flows and strengthened local criminal organizations. This has resulted in a rise in violence, with murders increasing by 82% in 2022.

Ecuador’s Role as a Transit Country for Cocaine

Ecuador’s proximity to Colombia and Peru, the world’s two largest coca-producing countries, means that a significant percentage of the cocaine produced transits through Ecuador before reaching international markets. This has contributed to its position as a hub for money laundering.

The Use of the US Dollar in Ecuador

The use of the US dollar in Ecuador has facilitated money laundering by allowing drug trafficking profits from the United States to flow directly into the country without the need for conversion.

Obstacles to Combating Money Laundering in Ecuador

  • Permeable banking system: The lack of formal mechanisms to investigate money laundering cases, limited human and technological resources, and a lack of knowledge of money laundering within the judiciary have all contributed to this issue.
  • Lack of articulation between the justice system and administrative units that raise alerts.

Estimates of Money Laundered in Ecuador

According to estimates by the Latin American Strategic Center for Geopolitics (CELAG), around $3.5 billion was laundered through Ecuador’s financial system in 2021, nearly three times the amount moved annually between 2007 and 2016.

Conclusion

Ecuador’s struggle to combat money laundering is a complex issue that requires a multi-faceted approach. The country must address its structural issues within its financial system, improve its mechanisms for investigating money laundering cases, and strengthen its knowledge of money laundering within the judiciary. Only then can it effectively tackle the scourge of money laundering and reduce its position as a hub for illicit financial flows.