Financial Crime World

Money Laundering Schemes Flourish in Ecuador Despite Efforts to Combat Crime

A Study Reveals the Challenges Facing Ecuador’s Fight Against Money Laundering

QUITO, ECUADOR - A recent study by the Ecuadorian Observatory of Organized Crime (Observatorio Ecuatoriano de Crimen Organizado – OECO) has shed light on the significant issue of money laundering in Ecuador. The study found that despite efforts to combat crime, money laundering schemes continue to flourish, particularly in industries that facilitate legality, such as real estate and secondhand car sales.

Money Laundering Hotspots

  • Certain economic activities, including construction, real estate, and online gambling, are frequently used by money launderers.
  • Real estate and secondhand car sales have historically facilitated the appearance of legality, making them attractive for money laundering operations.

The Role of Drug Trafficking in Money Laundering

  • Ecuador’s role as a drug transit country has led to an increase in violence and illicit revenues, pushing up levels of money laundering.
  • Large-scale drug trafficking is the main driver of money laundering in Ecuador, according to the Latin American Financial Action Task Force (Grupo de Acción Financiera de Latinoamérica – GAFILAT).

The Ease of Money Laundering

  • The use of the US dollar in Ecuador facilitates the laundering of assets from illicit economies.
  • The global dominance of the dollar makes it easy for criminals to move dirty money around the world, with 88% of global foreign exchange transactions involving the dollar (Bank for International Settlements).

Structural Obstacles to Combatting Money Laundering

  • Lack of formal mechanisms to investigate money laundering cases
  • Limited human and technological resources
  • Lack of knowledge of money laundering within the judiciary

The Impact on Ecuador’s Banking System

  • An estimated $3.5 billion was laundered through Ecuador’s financial system in 2021.
  • The country’s banking system is particularly susceptible to money laundering due to limited resources and lack of knowledge.

Conclusion

The study highlights the challenges facing Ecuador in tackling money laundering, emphasizing the need for greater cooperation between law enforcement agencies and the judiciary to combat this serious crime.