Financial Crime World

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Money Laundering and Financial Crimes on the Rise in Latin America

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A growing concern for law enforcement and financial institutions in Latin America is the increasing trend of money laundering and financial crimes. The region’s lax regulations and lack of transparency have created a perfect storm for criminal organizations to launder their ill-gotten gains.

Common Methods Used by Money Launderers

  • Conversion of cash into digital currencies, such as Bitcoin
    • Made easy by peer-to-peer (P2P) exchanges, which are often unlicensed and difficult to track
  • Use of trusts and shell corporations
    • Often created in jurisdictions with little to no identification requirements, making it easy for criminals to hide their identities
  • Other financial instruments such as casinos, insurance companies, and real estate transactions

The Rise of Cryptocurrencies

  • According to a recent study, 97% of cryptocurrency transactions ended up in countries with lax regulations and enforcement
  • Latin America leads the world in cryptocurrency usage, with five of the top seven spots held by regional nations

Challenges Faced by Law Enforcement Agencies

  • The region’s banking system is particularly vulnerable, with many banks failing to implement adequate anti-money laundering measures
  • The use of cryptocurrencies and online gaming platforms provides an extra layer of anonymity and is difficult for law enforcement agencies to investigate

Combating the Growing Threat

  • Implementing stricter guidelines for cryptocurrency exchanges
  • Increasing cooperation between countries to share information on suspected money laundering activities
  • Improving regulations and increasing transparency

Emerging Threat: Cybercrime

  • The growth of the internet in Latin America has created a new wave of cybercrime threats, including the use of cryptocurrencies and online gaming platforms
  • These platforms provide an extra layer of anonymity and are difficult for law enforcement agencies to investigate
  • It is essential that governments and private sector entities take steps to protect against these emerging threats

Conclusion

Money laundering and financial crimes are on the rise in Latin America, creating a significant challenge for law enforcement agencies and financial institutions. The region’s lax regulations and lack of transparency have created a perfect storm for criminal organizations to launder their ill-gotten gains. It is essential that governments and private sector entities work together to improve regulations and increase transparency to combat this growing threat.

References

  • INTSIGHTS (2020). The Dark Side of Latin America: Cryptocurrency, Cartels, Carding, and the Rise of Cybercrime.
  • Statista (2019). How Common is Crypto? June 12, 2019.
  • Partz, H. (2019). Bitcoin Trading Reaches All Time High in Venezuela Amidst Ongoing Economic Collapse. Cointelegraph. February 7, 2019.
  • Mandelker, S. (2019). Remarks of Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence before the House Committee on Homeland Security. March 12, 2019.

Image Credits

  • Figure 1: Latin America’s cryptocurrency usage (Source: Statista)
  • Figure 2: Cryptocurrency volume in Venezuela, Argentina, Colombia, and Peru (Source: Bitcoin.com)
  • Figure 3: Global internet penetration (Source: Statista)