Trade-based money laundering (TBML) is likely to become more prevalent in Latin America where a criminal boom in 2016 has made sales of illegally mined gold potentially more lucrative than the region’s cocaine trade.
There are two drivers of the region’s illicit gold rush: higher risks and lower profit margins in the global drugs trade and a surge in gold prices.
Both drivers are expected to continue in 2017. Gold prices in 2016 soared as a result of significant political uncertainties as a result of the failure of quantitative easing in the Eurozone, Brexit and a presidential election result in the US that surprised many.
More political uncertainty is anticipated in 2017, which will help sustain the gold price.
Conditions in the drugs trade are likely to be tougher, for example, in Colombia where the 2016 peace agreement between the government and FARC rebels means more official efforts and money can be directed at clamping down on drug producers.
The reason an increase in TBML is anticipated is because most of the gold emanating from Latin America is mined illegally and therefore cannot be traded on the open market until the original proceeds have been laundered.
The highest estimated proportion of illegal mining within national industries is believed to be in Venezuela (90 per cent) and Colombia (70 per cent).
Gold offers several advantages to organised criminals. It can be used to facilitate money laundering schemes, for example by being smuggled across porous borders and being sold, apparently legitimately to dealers.
The origins of melted gold meanwhile are hard to trace, and US-based gold dealers attract far less interest than institutions that handle cash transfers.
Categories: Trade Based Financial crimes News