By Dr. Jarrod Sadulski, Faculty Member, Criminal Justice, American Military University, and Major Efren Muñoz, Criminal Investigation Directorate and INTERPOL, National Police of Colombia
Developments in the international financial system have aided money laundering; technology and communications have made it possible to transfer funds worldwide with great speed and little difficulty. According to the United Nations Office on Drugs and Crime, between $800 billion and $2 trillion is laundered globally per year. That is two to five percent of the world’s Gross Domestic Product (GDP).
US-Colombia Money Laundering Has Long Been a Problem
Money laundering between the United States and Colombia has been a problem for many decades. Congress enacted the Money Laundering Control Act of 1986 during the 1980s cocaine era; this act made money laundering a federal crime and provided guidance for civil forfeitures.
However, criminal enterprises involved in the drug trade continue to develop illicit and creative ways to return money to Colombia. As a result, law enforcement has an important role in tracking large money transfers.
[Related: Behind the Scenes of Colombia’s War on Drug Trafficking]
According to the United Nations, drug trafficking is estimated to be worth around $400 billion a year. The UN also estimates that that around $100 billion a year of those drug profits moves through the United States financial system.
The Role of Cryptocurrency in Money Laundering
Cryptocurrency has especially had a significant role in money laundering. This form of digital currency is difficult for law enforcement to track, because there is no central authority that tracks the exchange of money. Cryptocurrency users who are responsible for transferring money are hidden through the anonymity that digital currency platforms provide.
[Related: An Introduction to the Darknet and Bitcoin]
In most countries, money laundering impacts the financial system because it affects currencies and interest rates. Criminals reinvest funds where they are least likely to be detected, rather than where the rate of return is highest.
That practice increases the threat of monetary imbalance with the inadequate distribution of resources caused by artificial distortion of the prices of goods and basic products. Some researchers in Colombia have concluded that the possible magnitude of money laundering in Colombia is between two and three percent of its GDP, which is almost 20 billion Colombian pesos ($4,900 million USD). Nonetheless, this amount is not easy to define, since it is extremely difficult to analyze the criminal economy.
The Origin of Money Laundering Cases in Colombia
Money laundering cases in Colombia mainly come from crimes such as:
- Drug trafficking
- Illegal mining
- Human trafficking
- Financing of terrorism
- Crimes against public administration
- Contraband items such as weapons
In general terms, illegal money arrives to Colombia as a payment for any illegal transaction. Criminals then invest the money in the financial system or just hide the cash.
A Famous Case in Colombia
A very famous case of hidden cash involved a police operation made by Criminal Investigation Directorate and INTERPOL (DIJIN) in conjunction with the Drug Enforcement Administration (DEA) in 2007. The case which was against Juan Carlos Ramirez Abadia, alias “Chupeta,” which means “lollipop” in Spanish.
Chupeta was the youngest of the leaders of the Cali cartel in the mid-1990s, when it was the most powerful crime organization in the world. During the police operation, law enforcement officials confiscated $80 million USD in cash, along with some gold bars hidden underground in houses located in Cali, Colombia.
Colombia Money Laundering Laws
The Colombian Financial Analysis and Information Unit (UIAF) defines money laundering as the process by which criminal organizations seek to give the appearance of legality to the resources generated from their illegal activities. In practical terms, money laundering is the process of making dirty money look clean, making it possible for criminal or criminal organizations to use resources and make a profit on them in some cases.
In Colombia, the crime of money laundering has 64 underlying crimes established in Article 323 of the Penal Code. Some of those underlying crimes are:
- Migrant smuggling
- Human trafficking
- Illicit enrichment
- Arms trafficking
- Trafficking in minors
- Financing of terrorism and administration of resources related to terrorist activities
- Trafficking in toxic drugs
- Narcotic drugs or psychotropic substances
- Crimes against the financial system
- Crimes against public administration
Money laundering is punishable in Colombia, even when the activities from which the illegal goods originate have been totally or partially carried out abroad. The average sentence imposed in Colombia for this crime is 8.3 years. Article 323 of the Colombian Penal Code holds that penalties against persons found guilty of money laundering must range from six to 15 years in prison.
[Related: The Failing Battle Against Drug Production in Colombia]
According to the United States Department of State, Colombia has one of the most rigorous Anti-Money Laundering and Anti-Financing of Terrorism systems in Latin America. Colombia has thousands of kilometers in borders with five countries (Venezuela, Brazil, Peru, Ecuador, and Panama) as well as with the Caribbean Sea and the Pacific Ocean.
As a result, it is very difficult to control the entry of money into Colombia. In regard to the legal system and the anti-money laundering regulatory structure in Colombia, however, the State Department notes that Colombia complies with international protocols.
About the Authors
Dr. Jarrod Sadulski is an associate professor at American Military University. He has engaged in speaking engagements in the United States, Central America, and Europe on the topics of human trafficking, narcotics trafficking, police responses to domestic terrorism, and various topics in policing. Most recently, he presented at the 2019 International Human Trafficking Conference. His expertise includes infrastructure security, maritime security, homeland security contraband interdiction and intelligence gathering. Jarrod was selected as the Coast Guard’s Reserve McShan Inspirational Leadership Award recipient for 2019.
Maj. Efren Munoz is a member of the Colombian National Police with more than seventeen years of experience in police service and criminal investigation, especially in crimes related to transnational organized crime, money laundering, forfeiture assets, terrorism, and drug trafficking. The qualities which have supported his personal and professional career are honesty, responsibility, integrity, and leadership. He has held positions that have allowed him to know crime closely, giving him the ability to successfully lead investigative processes and police operations against international criminal organizations, while working together with international representation agencies placed in Colombia such as the Immigration and Customs Enforcement (ICE) and the Federal Bureau of Investigations (FBI) of the United States of America.
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