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Colombia: The tangled web of money laundering

Luis Edmundo Suárez, director of Colombia’s Financial Information and Analysis Unit (UIAF): “Money laundering is a difficult crime to identify, and the abundant amounts of cash that are being handled seduce people from all sectors of society.” (Ernesto Suárez Gómez / ISH)

Luis Edmundo Suárez, director of Colombia’s Financial Information and Analysis Unit (UIAF): “Money laundering is a difficult crime to identify, and the abundant amounts of cash that are being handled seduce people from all sectors of society.” (Ernesto Suárez Gómez / ISH)

The fall of the major drug lords and the dismantling of illegal armed groups haven’t stopped money laundering in Colombia.

By Ernesto Suárez Gómez / ISH

January 8th, 2014 (ISH) A total of US$18 billion wasn’t collected by the Colombian government because of money laundering in the Andean nation in 2012, according to Luis Edmundo Suárez, the director of Colombia’s Financial Information and Analysis Unit (UIAF).

The amount exceeds total foreign investment for that year – US$15.82 billion – according to the Ministry of Commerce, Industry and Tourism.

The crime of money laundering is a process through which illegally obtained goods enter the legal economic system and are given the appearance of having been legally obtained.

Worldwide, this crime accounts for an annual sum of US$17.6 trillion, according to a 2011 report by the United Nations Office on Drugs and Crime (UNODC).

In Colombia, money laundering has been a crime since the rise of drug trafficking in the late 1970s. It’s estimated that Pablo Escobar – the biggest drug lord of all time – had a fortune of US$30 billion when he died in 1993.

Money laundering was further defined as a criminal offense following the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988.

One hundred-thirty countries have financial intelligence units associated with the Egmont Group, which coordinates investigations in response to the emergence of transnational criminal networks.

In Colombia, the UIAF was created in 1999 with the aim of detecting, preventing and generally combating money laundering in all economic activities.

In July, 2013, Colombia received the most important financial intelligence award in the world, which is issued by the Egmont Group, for the best case brought forward by a unit. Finland and Russia won the award in its first two editions, respectively.

The UIAF presented the case of the Álvarez Meyendorff brothers, two low-profile money launderers whose assets are worth an estimated $1.2 billion pesos (US$618 million).

Through the intelligence work of the UIAF, the Attorney General’s Office was able to take precautionary measures against 205 assets located in different cities and municipalities throughout the country, including apartments, houses, automobiles, hotels, businesses, properties, service stations, ranching consortia and thoroughbred horse-breeding operations.

The case of the Álvarez Meyendorff brothers has been the most substantial in the fight against organized crime in Colombia.

“Money laundering is a difficult crime to identify, and the abundant amounts of cash that are being handled seduce people from all sectors of society,” said Suárez, who received the award from the Egmont Group in July in South Africa.

For every US$100 laundered, only US$0.20 are recovered

Despite these efforts, for every US$100 laundered worldwide, authorities are able to recover only US$0.20, according to the UNODC.

In Colombia, the fall of the major drug lords and the dismantling of illegal armed groups haven’t stopped money laundering.

“Many of the leaders have been captured over the last 20 years, but successors rapidly emerge, maintaining the structure of the organizations and evolving to develop new financial schemes,” Suárez said. “Crime will continue as long as it generates money, and that’s why we need to attack their true motive, which is profit.”

The Revolutionary Armed Forces of Colombia (FARC), for example, buys large quantities of cattle and sells them, often at lower prices. As a result, the terrorist group controls the market for cattle in certain regions, affecting legal cattle ranchers, according to José Félix Lafaurie, president of the Colombian Federation of Cattle Ranchers.

Money laundering is carried out behind drug trafficking, corruption, extortion and kidnapping operations as the principal source of financing for criminal activity and largely is responsible for the expansion of crime throughout the world, Bo Mathiasen, the UNODC’s representative in Colombia, said.

“We believe that society in general needs to be informed … to prevent involvement in phenomena such as money laundering and similar activities,” Mathiasen said in Bogotá during a commemoration of Money Laundering Prevention Day on Oct. 29.

Negocios Responsables y Seguros (NRS), an alliance made up of public and private entities such as the UNODC, the Ministry of Justice, and the Bogotá Chamber of Commerce (CCB), together with the UIAF and the commerce superintendencies, has made efforts to detect crime and diminish its impact on the economy.

Colombia’s strict control of its financial system and the drastic requirements for opening a simple bank account have forced money launderers to dabble in a variety of economic activities to launder their money, reducing the level of bank involvement, according to Asobancaria and the Bogotá Chamber of Commerce.

The model for detecting money laundering and terrorist financing advocated by the CCB seeks to guide the business sector so that it can detect suspicious activities by partners, suppliers and customers.

For example, when entrepreneurs offer products that are well below the market price, it may be a warning sign, particularly when unrelated to the dynamics of the business or lacking a reasonable justification.

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