Financial Crime Soars in Peru as Desperation Drives Vulnerability to Extortion and Loan Sharking

Lima, Peru: A Hub of Financial Desperation

A surge in financial desperation has led to a sharp increase in extortion cases in Peru, with reports skyrocketing by 370% between 2021 and 2023. The Attorney General’s Office reported that 22,396 extortion cases were registered last year alone, a trend that continues into 2024.

The Root of the Crisis: Gota a Gota Loans

At the heart of this crisis is the predatory gota a gota loan system, where borrowers are forced to pay exorbitant interest rates on loans. These loans have become a major driver of extortion in Peru, accounting for six times as many reports made to the Interior Ministry’s complaints platform as all other forms of extortion combined.

Key Statistics:

• Gota a gota loans account for 6 times more reports than all other forms of extortion combined.
• 500,000 people owe gota a gota loans in Peru.
• Lima accounts for half of all reported cases.

The Impact of Economic Woes and Migration

Peru’s economic woes, including poverty and lack of access to credit, have made it vulnerable to exploitation by loan sharks. The influx of Venezuelan migrants has further exacerbated the situation, with over 1.2 million Venezuelans living in Peru lacking formal financial institutions and restricted access to credit.

Statistics on Venezuelan Migrants:

• Over 1.2 million Venezuelans live in Peru.
• Nearly half of Venezuelans in Peru are unbanked (World Bank Group study, September 2022).
• Only 5% have been able to receive credit from formal financial institutions (World Bank Group study, September 2022).

Foreign Competition and Transnational Gangs

Foreign competition has also entered the fray, with Venezuelan gangs challenging traditional Peruvian groups controlling gota a gota loans. Some of these gangs are seeking alliances with existing groups in an attempt to eventually take control of the market.

Threats from Transnational Mega-Gangs:

• Tren de Aragua has established itself in Peru, exploiting members of the Venezuelan diaspora and taking gota a gota loans by force.
• Addressing this crisis requires a multifaceted approach, including improving access to credit for vulnerable populations and strengthening regulations to prevent predatory lending practices.

Conclusion

The situation in Peru highlights the urgent need for a comprehensive solution that addresses the root causes of financial desperation and exploitation. By working together, we can create a safer and more equitable environment for all.