Illegal gold trade in Ecuador vulnerable to money laundering says new report

The illegal gold trade in Ecuador is growing and increasingly accelerated by illicit cross-border contraband flows and unique vulnerabilities to money laundering activity according to a new report by the Organisation of American States Department against Transnational Organised Crime (OAS/DTOC).

The report, On the trail of illicit gold proceeds: strengthening the fight against illegal mining finances, says the less developed state of the illegal gold trade in Ecuador as compared to other regional countries such as Peru and Colombia offers the government significant advantages in combating this illicit economy.

But Ecuador has some notable anti-money laundering (AML) deficiencies and the illegal gold trade is developing quickly within the country, fuelled by regional illicit supply chains and increasingly sophisticated domestic criminal networks.

Domestic and regional criminality

Regional illicit supply chains and actors continue to promote the extraction and commercialisation of illegal gold in the country while there are also signs that a more robust illicit infrastructure is developing within Ecuador according to the report.

It says legal businesses such as local gold processors and traders are expanding and linking themselves to the illegal gold trade while domestic criminal bands are also growing and increasingly specialising in illegal mining activity.

TBML and misinvoicing

Worrisome trends in export data suggest that illicit actors continue to use, innovate and adapt trade-based money laundering (TBML) methods in order to export substantial amounts of illegal gold to international buyers.

The sharp growth and misinvoicing seen in Ecuador’s gold ore exports to Asia in recent years merit special attention from authorities.

Recommendations

Ecuador should increase the public resources and sanctioning powers granted to oversight entities and customs enforcement to monitor non-financial businesses linked to the gold sector the report recommends.

It also suggests such resources and measures should be applied with a special focus on mineral processors, exporters dealing in gold ore, and cash transportation companies, given their substantial compliance challenges.

Targeted approach

Additionally, the government should expand its presence in remote mining areas and local municipalities where illegal gold is processed and traded, as well as border crossings close to illegal mining hotspots in order to combat international smuggling of minerals and supplies.

The report concludes that in investigations targeting the illegal gold trade, Ecuadoran officials should adopt a more comprehensive approach that targets actors higher up the illicit supply chain, including financiers, money launderers, exporters, and traders of illegal gold.

The OAS/DTOC report On the trail of illicit gold proceeds: strengthening the fight against illegal mining finances : Ecuador’s case, can be found here.

 



Categories: Trade Based Financial crimes News

Tags: , , , , , , , , , , ,

%d bloggers like this: