Case Studies

Case studies are organised by region, with each region featuring links to the countries where the case studies are located.

Latin America

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Sub-Saharan Africa

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South East Asia & Pacific

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Brazil

A criminal complaint has been fined against several French banks, accusing them of money laundering and financing meat companies driving deforestation in Brazil. From 2013 to 2021, the four French banks involved, BNP Paribas, Crédit Agricole, BPCE, and AXA, invested nearly $70 million in bonds issued by leading Brazilian meat companies, generating about $11.7 million in profits. An analysis of JBS and Marfrig slaughterhouses, financed by such investments, in Pará and Mato Grosso found that over 50% and 40% of suppliers, respectively, showed evidence of deforestation and intrusion into Indigenous lands. The founder of the NGO Harvest, that contributed to initiating the complaint, emphasised that banks have an obligation to prevent money laundering and must exclude actors profiting from illegal deforestation. In response to the complaint, Crédit Agricole and BPCE did not comment, while BNP Paribas and AXA provided statements emphasising their commitment to ESG standards.  

Keywords: Latin America, Brazil, cattle, primary production, money laundering, Indigenous rights, illegal deforestation

Sources:  https://news.mongabay.com/2023/11/french-banks-accused-of-money-laundering-linked-to-amazon-deforestation/ 

https://www.asso-sherpa.org/complaint-filed-against-french-banks-for-money-laundering-and-concealment-of-proceeds-from-illegal-deforestation-in-the-amazon 

Brazilian federal authorities launched an investigation into a money laundering network suspected of moving millions of dollars’ worth of illicit gold in 2023. Through a network of shell companies, individuals are alleged to have moved money linked to gold illegally sourced from Brazil’s northern neighbor Guyana. In one instance, a shell company purportedly to be trading hospital supplies was alleged to have laundered over $12.3 million in gold. Shell companies play an important role in Brazil’s illicit gold industry, with these companies providing a way for criminals to issue invoices without a physical address to hide the illegal origin of exported gold. Authorities have estimated that over 30 tonnes of gold is illegally extracted each year from the Brazilian Amazon, with this illicit practice exploiting low-earning miners in areas of poor human and economic development, causing considerable deforestation and socio-economic harm. 

Keywords: Latin America, Brazil, minerals, gold, primary production, deforestation, illegal mining


Source: https://www.occrp.org/en/daily/17831-brazil-launches-investigation-into-r-80-million-in-illegal-gold  

Cattle can both themselves be laundered (if they are grazed on land that has been illegally cleared and converted to pasture) and used as a means of laundering criminal proceeds from other exploits, like drugs trafficking. In Brazil, cattle have been laundered to obscure their links to land clearing, when they are moved from ranches that have contributed to land conversion through “clean” ranches that have not resulted in recent forest loss. 

In 2009, several Brazilian slaughterhouses signed the Terms of Adjustment of Conduct, an initiative of the Federal Prosecution Office and the Public Commitment on Cattle Ranching, and a voluntary protocol developed by Greenpeace, which precludes them from purchasing cattle reared on deforested land. However, a single cow might pass through up to 10 farms before it is slaughtered (from birth, through rearing and fattening). Any of these farms might be linked to illegal deforestation but many slaughterhouses assess links to deforestation only on the last farm a cow passes through - their direct supplier. As long as the last farm in the supply chain is from a “clean” ranch that is free from recent deforestation then slaughterhouses (and subsequent transporters and retailers, like supermarkets) are likely to mark them as deforestation-free, even if they have spent the majority of their life on and have passed through nine other ranches that have been converted from forested land. Indeed, data indicates that some ranchers own both “dirty” and “clean” ranches and launder cattle through their own properties. So long as one property is kept clean, they can continue to clear land for cattle grazing purposes on any number of other ranches. 

Other investigations by Global Witness have found that ranchers have fraudulently edited the boundaries of their ranch once they have cleared areas of land, so that this land conversion is no longer included within the property’s scope and the ranch appears free from deforestation. This is alleged to be the case for the Fazenda Espora de Ouro II Ranch in Brazil’s Pará state, which Global Witness also found appears to be registered in the name of an individual who could not legally be its owner (based on assessment of a database of land titles and beneficiaries). 

Cattle can also – and concurrently – be used as a means of laundering the proceeds of illicit activity. Drug traffickers – especially in Colombia (where the traceability of beef produce is particularly poor), Honduras, and Guatemala – are known to launder revenue from drugs by buying or grabbing land which they convert into pasture for cattle, which they also purchase with narcotrafficking proceeds. When the cattle are sold, profits are hard to trace back to the drug network and their illicit proceeds are effectively laundered. This practice, known as “narco-ranching”, is suspected of contributing up to 87% of deforestation in the Maya Biosphere Reserve, a large UNESCO heritage area of forest which covers over 2 million hectares of rainforest across northern Guatemala and borders other protected forests in Mexico and Belize. The Reserve is highly vulnerable to deforestation by crime groups due to its strategic location along a significant drug trafficking route up through Guatemala and Mexico leading to the US. 

Cattle ranching in such areas also frequently serves to hide airstrips and production facilities used by traffickers to produce and transport drugs or other illicit products. Airstrips now pepper the Maya Biosphere reserve, which are used by planes coming in from Colombia and Venezuela with cocaine to be smuggled across the border into Mexico. 

Keywords: Latin America, Brazil, cattle, primary production, money laundering, drug trafficking, illegal deforestation

Source: https://www.vox.com/science-and-health/2022/10/19/23403330/amazon-rainforest-deforestation-cattle-laundering   

Chile

In Chile, trade misinvoicing, which occurs when export or import invoices are falsified in the final goal of tax evasion or money laundering, remains prevalent. This practice is particularly significant in the copper industry, which accounted for 48.2% of the nation’s total exports in 2018. By underreporting the value of copper exports, companies have minimised their taxable revenue. Conversely, overreporting import values has allowed companies to reduce their tax burdens by inflating deductible costs. For instance, this practice was employed by Chile’s state-owned copper corporation, CODELCO, in its agreement with China Minmetals Corporation to supply copper at below-market rates. This has raised concerns about potential tax evasion and undervaluation. Trade misinvoicing also allows for money laundering, as falsely reported trade transactions are used to conceal illicit proceeds. Money can notably be moved across borders, as has been found to be the case for Caso Yaupel, a fruit importer and distributor that laundered money digitally across Colombia, Germany, Ecuador, and Chile. Trade misinvoicing is not just an economic problem but also affects public welfare and security. The practice is often linked with other criminal activities like drug trafficking and human trafficking.  

Keywords: Latin America, Chile, minerals, copper, trade and transport, tax evasion, money laundering, trade misinvoicing

Sources:  https://gfintegrity.org/trade-misinvoicing-in-chile/ 

Illegal logging is an ongoing issue in Chile and has caused extensive environmental and economic damage over several decades. The World Bank notably reports the destruction of 11,368 hectares of land and the generation of 1.2 million m³ of illegally harvested timber from 2013 to 2019. A significant consequence of the enormity of this sector is illicit activity, such as timber theft by criminal mafias. Timber theft by criminal mafias has surged, with the value of stolen wood increasing from US$20 million in 2018 to US$67.8 million in 2020. In addition, the ongoing conflict between the Mapuche Indigenous community and the government has also intensified due to logging on ancestral lands. Criminal groups exploit this situation, engaging in timber theft, creating fake invoices, and laundering illegal timber through legitimate financial structures. Investigations have revealed significant laundering through false documentation, sometimes even involving internationally certified companies. The government’s institutional framework has allowed organised crime to flourish in the timber sector. Government agencies have inadequately supervised timber companies, particularly regarding the proper use of shipping documents and invoices and the sustainable use of forest lands.  

Keywords: Latin America, Chile, timber, primary production, trade and transport, illegal logging, environmental crime, fraudulent documentation, illegal timber trade, money laundering, Indigenous rights

Source:  https://gfintegrity.org/illicit-activity-in-chiles-timber-sector/ 

Colombia

Cattle can both themselves be laundered (if they are grazed on land that has been illegally cleared and converted to pasture) and used as a means of laundering criminal proceeds from other exploits, like drugs trafficking. In Brazil, cattle have been laundered to obscure their links to land clearing, when they are moved from ranches that have contributed to land conversion through “clean” ranches that have not resulted in recent forest loss. 

In 2009, several Brazilian slaughterhouses signed the Terms of Adjustment of Conduct, an initiative of the Federal Prosecution Office and the Public Commitment on Cattle Ranching, and a voluntary protocol developed by Greenpeace, which precludes them from purchasing cattle reared on deforested land. However, a single cow might pass through up to 10 farms before it is slaughtered (from birth, through rearing and fattening). Any of these farms might be linked to illegal deforestation but many slaughterhouses assess links to deforestation only on the last farm a cow passes through - their direct supplier. As long as the last farm in the supply chain is from a “clean” ranch that is free from recent deforestation then slaughterhouses (and subsequent transporters and retailers, like supermarkets) are likely to mark them as deforestation-free, even if they have spent the majority of their life on and have passed through nine other ranches that have been converted from forested land. Indeed, data indicates that some ranchers own both “dirty” and “clean” ranches and launder cattle through their own properties. So long as one property is kept clean, they can continue to clear land for cattle grazing purposes on any number of other ranches. 

Other investigations by Global Witness have found that ranchers have fraudulently edited the boundaries of their ranch once they have cleared areas of land, so that this land conversion is no longer included within the property’s scope and the ranch appears free from deforestation. This is alleged to be the case for the Fazenda Espora de Ouro II Ranch in Brazil’s Pará state, which Global Witness also found appears to be registered in the name of an individual who could not legally be its owner (based on assessment of a database of land titles and beneficiaries). 

Cattle can also – and concurrently – be used as a means of laundering the proceeds of illicit activity. Drug traffickers – especially in Colombia (where the traceability of beef produce is particularly poor), Honduras, and Guatemala – are known to launder revenue from drugs by buying or grabbing land which they convert into pasture for cattle, which they also purchase with narcotrafficking proceeds. When the cattle are sold, profits are hard to trace back to the drug network and their illicit proceeds are effectively laundered. This practice, known as “narco-ranching”, is suspected of contributing up to 87% of deforestation in the Maya Biosphere Reserve, a large UNESCO heritage area of forest which covers over 2 million hectares of rainforest across northern Guatemala and borders other protected forests in Mexico and Belize. The Reserve is highly vulnerable to deforestation by crime groups due to its strategic location along a significant drug trafficking route up through Guatemala and Mexico leading to the US. 


Cattle ranching in such areas also frequently serves to hide airstrips and production facilities used by traffickers to produce and transport drugs or other illicit products. Airstrips now pepper the Maya Biosphere reserve, which are used by planes coming in from Colombia and Venezuela with cocaine to be smuggled across the border into Mexico. 

Keywords: Latin America, Colombia, cattle, primary production, drug trafficking, money laundering, illegal deforestation

Source: https://www.vox.com/science-and-health/2022/10/19/23403330/amazon-rainforest-deforestation-cattle-laundering   

In May 2013, InSight Crime reported that Colombian authorities seized 11 tons of contraband meat in Cucuta, near the Venezuelan border. These contraband goods were linked to money laundering operations by guerrilla and drug trafficking groups. The contraband meat, originating from Venezuela, was packed in a truck and discovered in Cucuta, Norte de Santander, Colombia. The meat was estimated to come from about 600 cows. Authorities believe these groups use the meat trade to launder drug money and generate revenues to purchase coca, a key ingredient in cocaine production. The process involves buying meat in Venezuela at black market prices and selling it in Colombia, taking advantage of the significant difference between the official and black market exchange rates of the Venezuelan bolivar. By purchasing meat cheaply on the black market in Venezuela and selling it at higher prices in Colombia, the groups maximise their profits. The FARC along with neo-paramilitary groups like the Urabeños and Rastrojos, are implicated. These groups are heavily involved in drug trafficking and use various methods, including contraband trade, to launder their illicit earnings. 

  

Keywords: Latin America, Colombia, cattle, primary production, terrorist and conflict financing, drug trafficking, money laundering

Sources: https://insightcrime.org/news/brief/contraband-meat-colombia-drug-trafficking-cocaine/ 

Democratic Republic of the Congo

The United States (US) sanctioned international mining magnate Dan Gertler for amassing a billion-dollar fortune through opaque and corrupt mining deals in the Democratic Republic of the Congo (DRC). In 2017, Gertler was sanctioned for allegedly using his close friendship with then President Joseph Kabila to act as an intermediary for mining asset sales in the DRC, which created a system where multinational companies had to go through Gertler to do business with the Congolese state. According to the US, the DRC reportedly lost over $1 billion in just two years due to Gertler’s corrupt deals. Despite being sanctioned by the US, Gertler was able to continue operating in the DRC’s mining sector through an international money laundering network that spanned from the DRC to Europe and Israel. In one instance, Gertler acquired new mining permits through proxy companies in the lead up to the 2018 Congelese elections. Moreover, as of 2022, Gertler was still reportedly earning millions of dollars from copper-cobalt mining interests in the DRC despite US sanctions.  

Keywords: Sub-Saharan Africa, Democratic Republic of the Congo, minerals, cobalt, copper, corruption and bribery, sanctions evasion, money laundering

Source: https://home.treasury.gov/news/press-releases/sm0243  

Ecuador

Los Lobos, a narco-trafficking gang affiliated with Mexico’s notorious Jalisco New Generation cartel, has infiltrated illegal gold mining in Ecuador. Their activities have reached remote areas, including Podocarpus National Park, where they extort miners and dominate almost all stages of the gold supply chain. Each miner is forced to pay an extortion fee of up to $1,000 every month to the gang, leading to violent clashes in instances of non-compliance, with several local officials opposed to illegal mining being attacked or even murdered. 

As criminal organisations in the region who have traditionally focused on drug trafficking expand into other criminal activities, the rising value of gold on international markets and the ease of laundering profits from the cocaine trade have made gold mining increasingly attractive to them.  

Keywords: Latin America, Ecuador, mining, primary production, gold, serious organised crime, drug trafficking, illegal mining, murder, money laundering, extortion

Source: https://news.mongabay.com/2024/05/ecuadors-los-lobos-narcotrafficking-gang-muscles-in-on-illegal-gold-mining/

Guatemala

In an article by Presna Libre, it is reported that Miguel Ángel Turcios Pineda is facing a legal process for money laundering in the case known as Fedecocagua, which involves a structure for laundering Q1 billion. The Public Ministry (MP) reported that Turcios Pineda will face trial as part of phase 2 of the Fedecocagua case. He was granted a substitute measure and the payment of a Q200,000 bail. The investigation by the Special Prosecutor’s Office against Impunity (Feci) of the MP indicated that in the first phase of the case, the manager of the Federation of Agricultural Cooperatives of Coffee Producers of Guatemala (Fedecocagua), Ulrich Gurtner Kappeler, was also arrested for money laundering. It was determined that a series of non-existent companies were generating invoices and through which the Superintendency of Tax Administration (SAT) returned the Value Added Tax that they had obtained at the time. It was referred that more than Q1 billion were benefited by these companies. It was established that Fedecocagua directors simulated coffee purchase and sale operations using front companies, who invoiced the coffee that the cooperatives and small producers delivered to Fedecocagua, who in turn simulated the payment of invoices, money that later returned to accounts through a series of transfers.

Keywords: Latin America, Guatemala, coffee, primary production, tax evasion, money laundering

Source: https://www.prensalibre.com/guatemala/justicia/caso-fedecocagua-miguel-angel-turcios-pineda-enfrenara-proceso-judicial-por-lavado-de-dinero-breaking/

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