Financial Crime World

Peru’s Financial Crisis Fosters Rise in Extortion and Loan Sharking

A surge in financial desperation has led to a proliferation of extortion and loan sharking schemes across Peru, leaving thousands of citizens vulnerable to exploitation.

The Rise of Extortion

  • Reports of extortion rose by 370% between 2021 and 2023
  • All but two of the country’s fiscal districts recorded a significant increase in extortion cases
  • According to the Attorney General’s Office, the capital city of Lima accounted for half of all reported extortion cases nationwide between May and December 2023

The Rise of Loan Sharking (Gota a Gota)

  • “Gota a gota” or “drop by drop” is a predatory loan scheme that demands extortionate interest rates from borrowers
  • The Interior Ministry’s complaints platform reported six times more cases of gota a gota than all other forms of extortion in 2023
  • Gota a gota originated in Colombia and arrived in Peru around the early 2010s
  • It began in the northern cities of Chiclayo, Piura, and Trujillo before spreading to Lima and eventually reaching 97 cities across the country by late 2017

The Causes of Financial Desperation

  • Poverty rates are predicted to reach their highest level since 2010 due to the COVID-19 pandemic
  • A cap on interest rates for business and consumer loans approved by Congress in May 2021 has driven individuals into the hands of extortionists as banks are less likely to grant loans
  • Nearly half of Venezuelans living in Peru lack access to formal credit institutions, while only 5% have received credit from formal financial institutions

The Impact of Foreign Criminal Groups

  • Venezuelan gangs, including the Tren de Aragua, a transnational mega-gang, have established themselves in parts of Peru and are reportedly using violence to take control of gota a gota operations
  • Experts warn that foreign criminal groups may seek alliances with existing Peruvian groups before attempting to take control

The Need for Action

  • Experts warn that the situation will continue to worsen unless authorities take drastic action to address the root causes of financial desperation and curb the activities of criminal groups.