Financial Crime Investigation Process in Peru Heats Up Amid Loan Sharking and Extortion Epidemic

Rise of Financial Vulnerability

Peru is grappling with a surge in loan sharking and extortion cases, driven by widespread financial vulnerability. According to data from the Attorney General’s Office, extortion reports have skyrocketed 370% between 2021 and 2023, with all but two of Peru’s fiscal districts recording a rise of at least 150%.

Loan Sharking: The Growing Concern

• Predatory “gota a gota” or “drop by drop” loans are driving the rise in loan sharking cases
• These loans originated in Colombia and arrived in Peru around 2010
• Gota a gota loans have become increasingly popular among vulnerable populations, particularly migrant Venezuelans living in Peru without access to formal financial institutions

Vulnerable Populations Targeted

• Over 500,000 people in Peru owe gota a gota loans, with many seeking the loans to pay other debts
• The most vulnerable population are the 1.2 million Venezuelan migrants living in Peru, who lack residency status and work in the informal job market

Foreign Competition Exacerbating Situation

• Colombian groups have traditionally controlled gota a gota loans in much of Peru, but recently arrived Venezuelan gangs have been challenging their dominance
• Some Venezuelan gangs may seek alliances with existing groups, aiming to eventually take control of the market

Financial Desperation Driving Victimization

Peru’s financial desperation is driving victimization as people turn to loan sharks due to restricted access to formal financial institutions. The country was hit hard by the COVID-19 pandemic and has struggled to recover, leading to a rise in poverty.

Government Response

• The government has approved a cap on interest rates of business and consumer loans given by financial institutions
• This move has exacerbated the situation as banks are less likely to grant loans, driving desperate individuals into the hands of extortionists
• The Attorney General’s Office is working to dismantle loan sharking networks, but the scale of the problem demands a more comprehensive approach

Challenges Ahead

The investigation process faces significant challenges in addressing the complex web of loan sharking and extortion cases. As foreign competition continues to exacerbate the situation, it remains to be seen whether the government can effectively tackle this growing concern and provide relief to vulnerable populations.