José Adán Salazar Umaña, alias "Chepe Diablo," has been accused of laundering money via shell companies in Panama, a reminder of the important role these corporate structures play for criminal groups in Latin America.
El Salvador's Attorney General Office said José Adán Salazar Umaña, alias "Chepe Diablo," suspected leader of the Texis cartel, allegedly opened front companies in Panama to launder money, reported La Prensa Gráfica on April 6.
Chepe Diablo was captured on April 4 and is accused of managing a criminal organization responsible for laundering an estimated $215 million.
Jorge Cortez, head of the Attorney General's Financial Investigation Unit said Chepe Diablo began to set up corporations in Panama once his name appeared on the US Treasury Department's "Kingpin List" in May 2014 and his Salvadoran bank accounts were closed as a result.
As Chepe Diablo's organization "was accumulating a lot of money," members of the criminal group decided to "create companies using the names of other people," Cortez was quoted by La Prensa Gráfica as saying.
Three people have been implicated in Chepe Diablo's money laundering scheme in Guatemala, La Prensa Gráfica reported separately on April 17. One of them, Rodolfo José Leiva Fajardo, is allegedly linked with a Panamanian company whose name reportedly appeared in the massive document leak last year that became known as the Panama Papers.
Chepe Diablo was removed from the OFAC list on April 7, 2017, but he is still detained in El Salvador, where he awaits his trial.
InSight Crime Analysis
The fact that Chepe Diablo allegedly relied on shell companies to launder money should not come as a surprise. A recent report from Global Financial Integrity, an advocacy organization based in Washington, DC, estimated that transnational illegal activities generate between $1.6 and $2.2 trillion per year, much of which flows through legal financial structures, including shell companies.
Organized crime groups must reinvest their revenues to allow their criminal operations to continue. In order to do so, criminal networks have long used shell companies with the aim of laundering money through banks without being detected. To a lesser degree, they have also relied on trade-based laundering schemes that hide illegal financial flows by making them seem like legitimate business transactions.
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The uncovering of the Panama Papers scandal did seem to boost the fight for financial transparency across the region. But as InSight Crime has previously reported, and as the Chepe Diablo case shows, Latin America still has a long way to go in terms of strengthening anti-money laundering policies and combating the illicit financial flows that allow crime groups to continue their activities.