Making Criminals Pay

Making Criminals Pay

By Dialogo
October 01, 2010



To the untrained eye, they looked like tourists. But it was business, not
pleasure, that brought Jorge Enrique Jiménez Urrego and Myriam Rincón Molina to
places such as Peru, Chile and the United States. They took Colombian drug money and
laundered it, benefiting the 27th front of the Revolutionary Armed Forces of
Colombia, or FARC.
Jiménez Urrego was the head of a Colombian money laundering ring operating
under several agricultural companies. He was also part of an international
laundering chain, illegally using currency exchange houses to move $47 million in
FARC cash into the financial systems of the countries he visited. Rincón Molina was
associated with a money laundering network assembled by Jiménez Urrego’s relatives
and front persons through money exchange professionals or “cambistas.”
Since 2004, their trips had been watched by Colombian authorities and the
U.S. Drug Enforcement Agency, or DEA. Police in Colombia, Peru and Chile organized
an operation in their countries that broke the criminal network and led to their
capture and 31 more detentions in May 2008. The arrests of Jiménez Urrego and Rincón
Molina showed Colombia’s commitment to eliminate criminal financial empires.
Even though money laundering has been broadly criminalized in Colombia, the
country remains a preferred site for money laundering activity in large part because
of the narcotrafficking business that takes place within its borders. The Colombian
government continues to fight the financial infrastructure of criminal and terrorist
organizations using national laws and international economic measures.
A Country’s Commitment
Globally, the narcotrafficking business generates $300 billion a year
according to the United Nations Office on Drugs and Crime. To legitimize the illicit
profit, drug kingpins are using traditional and emerging money laundering methods to
avoid detection and stay one step ahead of the law. Drug cartels “try to diversify
their risk, so they will not just use one channel; they will use a variety of
channels to move their funds,” Latin American studies professor Francisco González
from the Paul H. Nitze School of Advanced International Studies (SAIS) in Washington
DC told Diálogo in an interview.
In Colombia, the government employs legal instruments to address the
financial threat of criminal organizations. For example, the Extinction of Dominion
over Assets law is defined as the loss of rights to an asset, which is handed over
to the State through an official process. The law, created in 1996 and modified in
2002, applies when assets are acquired directly or indirectly from criminal
activity. Today, the law has become a legislative model for other governments in
Latin America, such as Mexico and Peru.
The Information and Financial Analysis Unit, or UIAF, was created to prevent
and detect money laundering in different economic sectors. The UIAF was consolidated
in 1999 and is a special administrative unit ascribed to the Ministry of Treasury
and Public Credit with legal capacity and administrative autonomy. Banks, mutual and
investment funds, wire transfers and casinos are among the entities that it
oversees. In its 11 years of operation, the UIAF has been considered “one of the
leaders in anti-money laundering efforts in Latin America,” Colombian banking
association, Asobancaria, Chief María Mercedes Cuéllar said in a speech at a threat
finance conference in Cartagena, Colombia, in 2009. In recent years, anti-money
laundering reporting requirements have broadened to other economic sectors such as
lotteries, bingo games, betting parlors and notaries.
Money laundering became a crime in Colombia in 2000 and penalties range from
six to 15 years for those convicted of the offense. The country also participates in
the Financial Action Task Force, or GAFI, an intergovernmental body that promotes
policies to fight money laundering and the financing of terrorism. At Colombia’s
GAFI compliance evaluation, the nation “obtained a satisfactory final qualification
of 4 on a scale from 1 to 5,” Cuéllar added.
Economic Sanctions
Colombian authorities are working closely with partner nations to defeat
money laundering networks. “Without international cooperation it is impossible to
defeat transnational crime,” then-Defense Minister Gabriel Silva Luján said at the
Latin American and Caribbean Police Summit in Cartagena in May 2010. “We need to
unite efforts that can allow us to capture criminals that affect not only Colombia,
but the international community.”
One of the international tools that Colombia is using to take action against
the financial networks of criminal and terrorist organizations is the U.S. List of
Specially Designated Narcotics Traffickers, commonly known in Latin America as
“Clinton’s List” because it was revised during former President Bill Clinton’s time
in office. The Designated List is part of the Kingpin Act, which applies financial
measures against significant foreign drug traffickers. In addition, it prohibits
U.S. persons from conducting financial or commercial transactions with these
individuals and entities, and freezes any assets the designees may have under U.S.
jurisdiction.
In an interview with Diálogo, Douglas Farah, a Latin American analyst and
senior fellow at the International Assessment and Strategy Center, said the
Colombian government “immediately saw the act’s benefits and embraced it.” The first
designees on the list were the Cali cartel’s leaders, Miguel and Gilberto Rodríguez
Orejuela. Together they built a $7 billion-a-year empire that by the mid-1990s
supplied 80 percent of the world’s cocaine, according to the DEA. They came up with
different ways of hiding cocaine, running the gamut from cement pillars, frozen
broccoli, and laundered drug proceeds through businesses that appeared legitimate
such as a chain of discount pharmacies, according to the U.S. newspaper The South
Florida Sun-Sentinel.
After 15 years, the list continues to prove successful in helping capture
narcotraffickers. The recent designation of Jorge Enrique Jiménez Urrego to the
Clinton List on May 6, 2010, shows the international efforts to eradicate the
economic power of criminal organizations. U.S. Office of Foreign Assets Control, or
OFAC, Director Adam J. Szubin stated: “The Jiménez Urrego money laundering
organization [is] responsible for facilitating the movement of millions of dollars
for the FARC in support of its narcoterrorist activities.”
In the past, the drug kingpin designations were “once largely seen as a U.S.
tool trying to deal with a U.S. problem” of drug consumption, Farah said. Luckily,
he added, that view has changed as the region becomes more aware of the financial
threats that criminal organizations pose in nations where they operate. Farah
explained that even though the act does not have the capacity to end drug
trafficking or criminal activities, it “has removed those organizations where
kingpins are targeted as substantial threats to the state.”
The positive results obtained in the fight against money laundering are
acknowledged by governmental and private entities. For example, Cuéllar thanked OFAC
for its support and endorsement of the Colombian financial sector in her 2009
speech. The positive effects of the list are also identified by the Colombian
National Federation of Merchants, or FENALCO, Bogotá branch. The list “has become a
good mechanism and the businessmen have grown accustomed to it,” FENALCO’s Executive
Sub-director Paula Lucia Gómez Velez told Diálogo. “It is his reputation [the
businessman] that is in play.”
As of June 2010, more than 1,500 Colombian citizens and 700 national
companies were on the list. There are also ways to be removed, OFAC director Szubin
told the Colombian Newspaper El Tiempo. In the past three years, he said, 330
Colombians have been removed from the list. “Nobody has been mistakenly included on
the Clinton List,” he said.

Money Laundering Vulnerabilities
In Colombia, corporations and business owners are still learning the risks of
getting involved in money laundering actions wittingly or unwittingly. FENALCO
suggests employers should be more careful in their business practices to avoid being
linked with money laundering. “Many businessmen are acting in good faith and because
they did not have the necessary precautions, have permitted money laundering to
affect their companies,” FENALCO’s Executive Sub-director Paula Lucia Gómez Velez
said of the 40 percent increase in companies with suspicious operations from 2007 to
2009 as reported by the Information and Financial Analysis Unit, or UIAF. These
reports have allowed the District Attorney’s office to initiate investigations and
freeze assets. This situation occurred in part because anti-money laundering
initiatives were seen as an administrative cost by entrepreneurs, a business
practice that has changed, she added. The UIAF reported a 70 percent decrease in the
number of people involved in money laundering over the same period, showing that
individuals are becoming more aware of suspicious transactions.
Anti-money laundering specialist John Cassara warned that businessmen need to
be more aware of what an association with money laundering can mean for their
companies. He said that many businessmen believe that this phenomenon does not touch
them and they are unaware that money laundering could severely damage their
company’s trade relations. In an interview with Diálogo, Cassara said that
businessmen shrug it off, saying “We are not police officers, if somebody wants to
buy our products, so what?”
The arrest of money launderers Jorge Enrique Jiménez Urrego and Myriam Rincón
Molina by Colombian authorities and their designation on Clinton’s List shows how
international cooperation can help address criminal financial threats. Gómez Velez
believes that Colombia’s experience combating money laundering has made the
country’s regulations among the most comprehensive in the international
community.
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