HomeNewsBriefColombian Loan Sharks Expanding Internationally
BRIEF

Colombian Loan Sharks Expanding Internationally

COLOMBIA / 1 SEP 2015 BY ARRON DAUGHERTY EN

Multiple reports throughout Latin America indicate that Colombian loan sharks are allegedly expanding their operations throughout the region. 

Over the last few years, multiple groups of Colombian nationals have been arrested for usury-related crimes in countries ranging from Brazil to Honduras to Argentina. 

An unnamed Colombian police intelligence official told El Tiempo that authorities have also identified Colombian loan shark groups operating in Peru and Chile. These groups have links to other Colombian criminal organizations such as the Oficina de Envigado and the Urabeños, the report said. 

These groups operate by offering credit to poor and working-class people who lack access to formal banking services. However, the loan sharks often charge abusively high interest rates in a practice known as "gota a gota" or "drop by drop," named after the way in which victims are slowly bled dry of funds. 

When debtors can no longer pay, loan sharks may begin taking possessions and property as payment or resort to violence, according to reports. 

"Gota a gota" was a practice frequently seen in Medellin, Colombia during the 1980s, an alleged loan shark known only as "Mario the Colombian" told Argentine newspaper Clarin.

"At the time, there was an overflow of drug trafficking money, and someone thought it should be used for loans," he added.

According to Mario and other reports, usury lending in Colombia and abroad is often linked to other illicit activities. Groups may use it to fund other criminal schemes or to launder dirty money.

InSight Crime Analysis

While some governments have occasionally sought to scapegoat Colombians for crime or other social ills, these reports of Colombian loan sharks expanding their operations abroad are plausible for several reasons. 

SEE ALSO:  Colombia News and Profiles

First, usuary lending is a relatively cheap business to set up. The initial amount of money need to finance small loans is inexpensive, compared to setting up drug labs or establishing elaborate smuggling routes. 

Secondly, loan sharks can establish themselves in new countries by piggybacking on other criminal enterprises. Many of the same nations which caught Colombian loan sharks have also recently captured Colombians involved in the drug trade.

Third, while financial development varies widely from country to country, a reported 65 percent of Latin Americans still lack access to formal banking. Despite their abusive practices, Colombian loan sharks are filling a high-demand financial niche. 

Fortunately, Latin America has also seen explosive growth in the number of legitimate micro-lenders. Facilitated by cheap new technology like mobile banking through cellular phones, these lenders are increasingly moving into sectors serviced by loan sharks. If this continues, it is possible that loan sharks may soon be priced out of their once lucrative market. 

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

COLOMBIA / 25 JAN 2017

Extortion in Colombia is decreasing as a peace process advances with the country's main guerrilla group, but this trend…

COLOMBIA / 30 OCT 2012

There are signs that a new battle for control of Colombia’s emerald business is already breaking out, as…

COLOMBIA / 11 MAY 2012

The city of Bogota has seen a significant reduction in homicides after passing a ban on carrying guns. If the…

About InSight Crime

THE ORGANIZATION

Unraveling the Web of Elites Connected to Organized Crime

27 JUL 2021

InSight Crime published Elites and Organized Crime in Nicaragua, a deep dive into the relationships between criminal actors and elites in that Central American nation.

THE ORGANIZATION

InSight Crime’s Greater Focus on US-Mexico Border

20 JUL 2021

InSight Crime has decided to turn many of its investigative resources towards understanding and chronicling the criminal dynamics along the US-Mexico border.

THE ORGANIZATION

Key Arrests and Police Budget Increases Due to InSight Crime Investigations

8 JUL 2021

With Memo Fantasma’s arrest, InSight Crime has proven that our investigations can and will uncover major criminal threats in the Americas.

THE ORGANIZATION

Organized Crime’s Influence on Gender-Based Violence

30 JUN 2021

InSight Crime investigator Laura N. Ávila spoke on organized crime and gender-based violence at the launch of a research project by the United Nations Development Programme.

THE ORGANIZATION

Conversation with Paraguay Judicial Operators on PCC

24 JUN 2021

InSight Crime Co-director Steven Dudley formed part of a panel attended by over 500 students, all of whom work in Paraguay's judicial system.