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Last updated on April 19, 2014 at 1:20 EDT

Peru tightening noose on money laundering

July 5, 2005

By Jude Webber

LIMA, Peru (Reuters) – Criminals laundering illicit cash inPeru have felt untouchable in the past, but tough rules andcloser cooperation are cracking down on dirty deals that may beworth more than $2 billion a year, a top official said.

Peru’s entry last week into the Egmont Group of 101government agencies which gather, analyze and exchangeinformation on suspected financial crimes will make it harderfor drug traffickers, contraband ringleaders and terrorists tohide their spoils, the official said.

“They have felt immune, they haven’t felt scrutinized,”Carlos Hamann, executive director of Peru’s FinancialIntelligence Unit, told Reuters late on Monday.

Peru is the world’s No. 2 producer of cocaine, and drugtrafficking is a major source of illicit cash.

Money laundering “will start to become more difficultbecause of all the controls,” Hamann said.

Sponsored by Spain and the United States, Peru passed thetough Egmont Group membership tests late last year and earlythis year, and has since been able to share information eventhough its formal entry was only sealed last week.

Hamann says Peru, whose Financial Intelligence Unit onlygot to work in September 2003, has sent 29 criminal cases toprosecutors.

Peru believes it is becoming sharper at sniffing out suchcrime, rather than witnessing a money laundering explosion. Sofar, only one money laundering case has reached court.

WIDENING THE NET

No hard figures exist on how much dirty cash creeps intoPeru. International agencies reckon between 1.5 and 5 percentof gross domestic product worldwide is laundered, suggesting$1.2 billion to $3 billion could be laundered in this Andeancountry, though officials consider $3 billion too steep anestimate.

Peru has widened the net of groups that must reportsuspicious transactions from just banks to 32 different bodies.In a bid to choke off international terrorist financing — akey world concern after al Qaeda’s attacks in the United Statesand Spain — it has also required manufacturers and importersof explosives, mining and chemicals companies to reportsuspicious transactions for the past year.

Peru’s Financial Intelligence Unit says 13 of the 29 casessent to prosecutors relate to drug trafficking, with anestimated $44.7 million laundered. There was one case ofintellectual property crime, and it involved a suspected $54.5million.

A single case of kidnapping involved $15.5 million andthree cases of arms trafficking moved $26 million.

Hamann declined to comment on any links between moneylaundering and terrorist financing in Peru, where officials saydrug traffickers are financing leftist rebels.

Colombia, the world’s top cocaine producer, has SouthAmerica’s biggest money laundering problem, Hamann said.

Criminals no longer just try to legitimize their money byputting it in a bank account. They also use methods such asbuying life insurance policies and cashing them in early.

Money launderers can also exploit legal loopholes, like thefact that in Bolivia tax fraud is not considered a crime fromwhich money laundering charges can stem, said Miguel Delgado,the Peru Financial Intelligence Unit’s director of preventionand analysis.