Financial Crime World

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Financial Crime Soars in Peru as Loan Sharks and Extortion Rings Thrive

Lima, PERU - A wave of financial desperation is driving the growth of loan sharking and extortion rings in Peru. According to recent reports, cases have skyrocketed by 370% between 2021 and 2023.

Financial Desperation Fuels Victimization

The rise of gota a gota loans, or “drop by drop” loans, has become a lucrative business for loan sharks. These predatory loans demand extortionate interest rates and accounted for six times as many complaints made to the Interior Ministry’s platform in 2023 compared to all other forms of extortion combined.

The Prevalence of Gota a Gota Loans

The practice of gota a gota originated in Colombia in the early 2010s and has since spread to 97 cities across Peru. The capital, Lima, accounts for half of all reported cases nationwide between May and December last year. A recent example of this growing market was seen on March 16 when police in Lima dismantled a Venezuelan-Colombian gota a gota group with 20 members.

Who is Affected by Gota a Gota Loans?

Around 500,000 people in Peru owe gota a gota loans, according to credit organization FEPCMAC. The most common reason borrowers seek out these loans is to pay other debts, the Interior Ministry has said. The country’s economic woes and lack of access to formal financial institutions have left many vulnerable to exploitation.

  • Vulnerable Populations: Peruvians are not alone in this struggle; over a million Venezuelan migrants living in Peru are particularly susceptible to being exploited by loan sharks due to their restricted access to credit and informal job market status.
  • Access to Credit: Only 3% of Venezuelans living in Lima have accessed credit from a bank, according to a recent USAID study.

Foreign Competition Exacerbates Situation

Colombians have traditionally controlled gota a gota loans in much of Peru, but both they and Peruvian groups face challenges from recently arrived Venezuelan gangs. Some Venezuelan gangs may seek alliances with existing groups with an eye on eventually taking control, according to organized crime consultant Abraham Valle.

  • The Tren de Aragua: The transnational Venezuelan mega-gang has reached that point in at least one part of the country, said Dr. Jorge Chávez, National Coordinator of the Attorney General Office’s organized crime division.
  • Exploitation of Vulnerable Individuals: Given the presence of over a million Venezuelans without access to credit, the Tren de Aragua and other gangs continue to exploit these vulnerable individuals.

The situation in Peru highlights the need for greater support and protection for those affected by gota a gota loans.