HomeNewsBrief$5 Bn Money Laundering Bust Puts Brazil Under Spotlight
BRIEF

$5 Bn Money Laundering Bust Puts Brazil Under Spotlight

BRAZIL / 17 MAR 2014 BY SETH ROBBINS EN

A coordinated wave of police raids in Brazil dismantled a ring alleged to have laundered nearly five billion dollars -- stark evidence that huge quantities of criminal money is flowing through one of the world's largest economies.

More than 400 police searched 81 different properties and served more than a dozen arrest warrants in 17 different Brazilian cities, according to business newspaper Valor Economico. Among those arrested was the owner of one of the largest gas stations in the federal capital of Brasilia, according to news agency EBC.

According to police, several main players behind black-market money exchanges in Brazil were also part of the ring. The ring is alleged to have laundered about 10 billion reais, approximately $4.3 billion, for individuals and companies involved in drug trafficking, tax evasion, gemstone smuggling, illegal mining and other crimes.

The operation was entitled, Lavo Jato, or Jet Wash, because the money-laundering scheme used a number of gas stations and dry cleaners to "wash" the criminal money.

According to Folha De S. Paulo, the operation was linked to the arrest of Andre Santos, a businessman caught last December with nearly $300,000 in his socks at the Brasilia airport. Santos is accused of being the financial arm of a Lebanese gang that smuggled illegal goods from Paraguay.

InSight Crime Analysis

The enormous amount of money that passed through this money-laundering scheme underscores the fact that Brazil, the world's seventh largest economy, is clearly struggling to combat financial crimes.

According to one 2008 estimate, official corruption is responsible for up to 70 percent of the money laundered in Brazil. And just last February, InSight Crime media partner Publica outlined how a Brazilian businessman in Florida allegedly laundered money for Mexico's Sinaloa Cartel.

SEE ALSO: Brazil News and Profiles

According to the State Department's annual drug report, it is difficult to determine comprehensive numbers on money laundering patterns in Brazil because the country does not keep records on convictions or arrests. The State Department report named São Paulo, Brazil and surrounding parts of Argentina and Paraguay as areas that possess "high risk factors" for money laundering because smuggling is rampant -- not only of drugs and weapons but also CDs, DVDs and illegal computer software.

The report details that high-priced goods are often paid for in US dollars and then the money is smuggled from Paraguay into Brazil, where it can eventually make its way into US banking systems. At least part of that scheme appears to have been replicated in this money laundering case.

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