Financial Crime Spree Soars in Peru: Loan Sharking and Extortion Reach All-Time High

The Rise of Financial Desperation in Peru

Lima, Peru - A surge in financial desperation has fueled a sharp increase in loan sharking and extortion cases in Peru. According to the Attorney General’s Office, there were 22,396 reported cases of extortion last year, compared to just 4,761 in 2021.

The Proliferation of Gota a Gota Loans

The proliferation of gota a gota loans, also known as “drop by drop” loans, is largely attributed to the sharp increase in loan sharking and extortion cases. These predatory loans charge extortionate interest rates and have become a major problem for many individuals.

• Origins: Gota a gota originated in Colombia and first appeared in Peru’s northern regions before spreading to Lima and other parts of the country.
• Spread: By late 2017, it had reached 97 cities across the nation. Today, Lima accounts for half of all gota a gota cases reported nationwide.

Vulnerable Populations

Many Venezuelans living in Peru are particularly vulnerable due to their lack of residency status and restricted access to formal financial institutions. A staggering 500,000 people in Peru owe gota a gota loans, according to credit organization FEPCMAC.

• Venezuelan Presence: The presence of over a million Venezuelans without access to credit plays into the hands of these gangs, who exploit vulnerable individuals seeking new horizons.
• Colombian and Venezuelan Gangs: Colombian gangs have traditionally controlled the gota a gota market, but Venezuelan gangs have begun to gain traction in recent years.

The Rise of Foreign Gangs

Peru’s Attorney General Office has warned that foreign gangs are increasingly taking control of the gota a gota market. In Arequipa, a region in southern Peru, Tren de Aragua, a transnational Venezuelan mega-gang, has taken control of gota a gota operations at gunpoint.

• Transnational Gangs: Experts warn that foreign gangs are forming alliances with existing groups in order to eventually take over the market.
• Poverty and Economic Struggles: Poverty has risen to its highest level since 2010 due to the COVID-19 pandemic and subsequent economic struggles, driving individuals into the hands of extortionists.

Conclusion

The rise of financial crime in Peru is a complex issue that requires attention from government agencies, financial experts, and civil society. By understanding the root causes of the problem and working together, we can develop effective solutions to address this growing concern.