HomeNewsBriefIllegal Exchange Houses Flourish on Uruguay-Brazil Border
BRIEF

Illegal Exchange Houses Flourish on Uruguay-Brazil Border

MONEY LAUNDERING / 3 JUL 2017 BY TRISTAN CLAVEL EN

A media report blames lack of government control for Uruguay's extensive illegal currency exchange operations along the border with Brazil, but the country's reliance on a vast informal economy is the root cause.

Rivera, an Uruguayan city adjacent to Brazil's Santana do Livramento, has developed into a hot spot for illegal currency exchange operations, El Observador reports.

The daily flow of thousands of people and the absence of government control allow unregistered currency exchange houses to flourish in the border town, according to the news outlet.

While the government can fine individuals up to nearly 750,000 Uruguayan pesos (around $26,000) for breaking currency exchange regulations set by the Central Bank of Uruguay (Banco Central de Uruguay - BCU), only five BCU investigators are dedicated to controlling this sector.

SEE ALSO: Coverage of Money Laundering

An anonymous owner of a legal exchange point complained about "disloyal competition" in Rivera. The owner told El Observador that during a visit from BCU officials in 2011, he warned them of illegal exchange houses. He was told to file an official complaint, a complicated process that the owner refused to undertake for fear of reprisal.

According to Daniel Espinosa, Uruguay's Secretary Against Money Laundering (Secretario Nacional para la Lucha contra el Lavado de Activos y el Financiamiento del Terrorismo), many laundering schemes involve these currency exchange houses.

In April 2017, authorities arrested nine individuals in Rivera for running a leather and wool contraband scheme. The two leaders owned illegal currency exchange houses through which profits were laundered.

InSight Crime Analysis

The exchange houses are common for two reasons. They fulfill a need; there are not enough regulators.

Border areas do not just harbor high-end money launderers but also run-of-the mill, small businesspeople and contraband traders who do not want to use banks or cannot afford banks. These exchange houses help them survive. Indeed, an average of nearly 25 percent of workers in Uruguay are involved in unregulated activities, according to El País. In Rivera, this number could be above 40 percent, El País says.

SEE ALSOUruguay News and Profile

The government's paltry team of regulators makes this an easy choice. Currency exchange operations have long served to launder criminal proceeds throughout Latin America, sometimes for sums measured in billions of dollars. And Uruguay has long struggled against international money laundering. But the government has yet to address the problem with the deployment of real regulatory resources or personnel, or the establishment of social and economic programs to undercut the informal 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 / 2 NOV 2016

Official estimates suggest that 11 percent of Colombia's population is allegedly involved in illegal activities, a questionable assertion that nonetheless…

ELITES AND CRIME / 4 APR 2016

A massive leak of confidential documents from a Panamanian law firm shines a light on how elites across the world…

EL SALVADOR / 13 JAN 2021

The head of El Salvador’s financial regulatory agency has instructed banks not to close the accounts of suspected or formally…

About InSight Crime

THE ORGANIZATION

InSight Crime Tackles Illegal Fishing

15 OCT 2021

In October, InSight Crime and American University’s Center for Latin American and Latino Studies (CLALS) began a year-long project on illegal, unreported, unregulated (IUU) fishing in…

THE ORGANIZATION

InSight Crime Featured in Handbook for Reporting on Organized Crime

8 OCT 2021

In late September, the Global Investigative Journalism Network (GIJN) published an excerpt of its forthcoming guide on reporting organized crime in Indonesia.

THE ORGANIZATION

Probing Organized Crime in Haiti

1 OCT 2021

InSight Crime has made it a priority to investigate organized crime in Haiti, where an impotent state is reeling after the July assassination of President Jovenel Moïse, coupled with an…

THE ORGANIZATION

Emergency First Aid in Hostile Environments

24 SEP 2021

At InSight Crime's annual treat, we ramped up hostile environment and emergency first aid training for our 40-member staff, many of whom conduct on-the-ground investigations in dangerous corners of the region.

THE ORGANIZATION

Series on Environmental Crime in the Amazon Generates Headlines

17 SEP 2021

InSight Crime and the Igarapé Institute have been delighted at the response to our joint investigation into environmental crimes in the Colombian Amazon. Coverage of our chapters dedicated to illegal mining…