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

MONEY LAUNDERING / 14 SEP 2015

Panama has made some key moves in order to get itself removed from the international "grey list" of nations that…

ARGENTINA / 20 APR 2016

As a major scandal involving the diversion of millions of dollars from public works contracts rocks Argentina, a new report…

EL CHAPO / 11 OCT 2011

Those who think that financial investigations are the key to unravelling organized crime are living in a fantasy world, where…

About InSight Crime

THE ORGANIZATION

Environmental and Academic Praise

17 JUN 2022

InSight Crime’s six-part series on the plunder of the Peruvian Amazon continues to inform the debate on environmental security in the region. Our Environmental Crimes Project Manager, María Fernanda Ramírez,…

LA ORGANIZACIÓN

Series on Plunder of Peru’s Amazon Makes Headlines

10 JUN 2022

Since launching on June 2, InSight Crime’s six-part series on environmental crime in Peru’s Amazon has been well-received. Detailing the shocking impunity enjoyed by those plundering the rainforest, the investigation…

THE ORGANIZATION

Duarte’s Death Makes Waves

3 JUN 2022

The announcement of the death of Gentil Duarte, one of the top dissident commanders of the defunct Revolutionary Armed Forces of Colombia (FARC), continues to reverberate in Venezuela and Colombia.

THE ORGANIZATION

Cattle Trafficking Acclaim, Investigation into Peru’s Amazon 

27 MAY 2022

On May 18, InSight Crime launched its most recent investigation into cattle trafficking between Central America and Mexico. It showed precisely how beef, illicitly produced in Honduras, Guatemala…

THE ORGANIZATION

Coverage of Fallen Paraguay Prosecutor Makes Headlines

20 MAY 2022

The murder of leading anti-crime prosecutor, Marcelo Pecci, while on honeymoon in Colombia, has drawn attention to the evolution of organized crime in Paraguay. While 17 people have been arrested…