HomeNewsAnalysisColombia AG Says Gold Trader Created Fake Miners to Launder Millions
ANALYSIS

Colombia AG Says Gold Trader Created Fake Miners to Launder Millions

COLOMBIA / 6 MAY 2019 BY INSIGHT CRIME STAFF EN

A new investigation by Colombia’s Attorney General’s Office has revealed a potential stain on the revenues of a major gold mining company concerning attempts to launder profits gained from illegal mining.

In an operation named “Legend of the Gold” (Leyenda del Dorado), a team of prosecutors dismantled a ring of alleged suppliers of illegal gold, including C.I.J. Gutiérrez, one of the country’s largest gold companies based in Medellín.

Luz Ángela Bahamón, the director of Colombia’s specialized anti-money laundering unit, explained that C.I.J. Gutiérrez created a ring of suppliers engaged either as fronts or as moving large quantities of illicit money.

SEE ALSO: Peru Targets Multinationals Linked to Sale of Illegal Gold

Reports by Colombia’s National Directorate of Taxes and Customs (DIAN) caught the attention of authorities when they showed that C.I.J. Gutiérrez went from exporting around $146,000 worth of gold in 2006 to more than $453,000 worth in 2012.

The Attorney General’s Office reviewed the last 10 years of financial transactions and discovered fictitious operations involving money laundering worth around $740 million. These manipulations were intended to allow tons of illegally mined gold to be sold legally on global markets.

InSight Crime Analysis

While actions against illegal mining in Colombia have often focused on seizing dredging barges and excavation equipment due to their damage to the environment, the Attorney General’s Office has also been following the money coming from this illegal economy.

Over the last four years, the Colombian government has prosecuted international gold companies and over 50 suppliers in the country who combined to launder $3.4 billion. Attorney General Néstor Humberto Martínez has proposed banning private sales of gold, leaving a monopoly to the state, but this has run into opposition.

SEE ALSO: Iranian Gold, Platinum Smugglers Arrested in Colombia’s Chocó 

To export gold — or any other minerals — companies must demonstrate how these were legally acquired, including through authorized mining operators. These include small-time subsistence miners, known as “barequeros.”

Barequeros frequently mine small fragments of gold on the banks of rivers without any mechanized help. They are often considered to be the most fragile link in the illegal mining chain and are often manipulated by illegal organizations to mask their operations.

In 2016, an investigation by Colombia’s Ministry of Mines and Energy discovered that of around 100,000 mining claims listed at the National Mining Agency (ANM), close to 8,000 were registered to barequeros who were either dead or that simply did not exist.

This practice was already identified in 2015 when executives from C.I. Goldex, another gold mining firm, were arrested on charges of faking millions in transactions, including by falsifying signatures and fingerprints.

Legal measures were strengthened at the time to avoid such methods, but the Attorney General’s Office determined that C.I.J. Gutiérrez remained active in using this scheme.

One strong piece of evidence was a string of purchases worth $492,000 that were made to suppliers of gold that did not appear in official records or were already dead, according to the investigation.

The identification of those on the list who were already deceased came about due to two seemingly unrelated murders, one in Barranquilla in northern Colombia, the other in the Bajo Cauca region in the northwest of the country. They became linked when prosecutors discovered both men had once been registered as barequeros and gold suppliers to C.I.J. Gutiérrez.

The investigation revealed an essential element to the scheme. Registered barequeros, whether real or not, were used to justify millions of dollars in transactions. These impersonations played an important role. They were used to send “ghost transactions,” which legalized large transfers of money sent abroad and allowed illegally mined gold to be sold legally in the United States and Europe.

However, until now, this investigation remains at a preliminary stage, with no international connections having yet been revealed. But the question remains of how Colombia exports more gold than it produces (In 2017, 41 tons of gold were officially produced while just 58 tons were legally exported.)

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