HomeNewsBriefAirport Controls Unlikely to Stem Flow of Illegal Gold From Peru
BRIEF

Airport Controls Unlikely to Stem Flow of Illegal Gold From Peru

GOLD / 11 FEB 2014 BY MIRIAM WELLS EN

Special security teams tasked with catching contraband gold smuggling will be placed in five airports in Peru, though the efficiency of gold laundering inside the country means the initiative will likely have limited impact on the billion dollar trade.

From February 21, teams formed of police and officials from Peru's Public Ministry will start operations in Lima, Arequipa, Cusco, Juliaca and Madre de Dios airports, reported El Comercio. The teams' mission will be detecting the transport of illegally sourced gold and other minerals out of the country.

Senior mining official Daniel Urresti said the teams would "hit the illegal mining trade hard because they will make the transport chain more complicated. The objective is to raise the transport costs so that mining ceases to be a profitable business."

The government also plans to create a register of buyers of cyanide and mercury, two chemicals used in the gold mining process.

InSight Crime Analysis

Peru's illegal gold mining industry is huge, generating as much as $3 billion a year -- constituting about a fifth of all Peruvian gold exports. Urresti estimates that 80 percent of illegally mined gold leaves via the country's airports. This estimate is probably about right, making these teams a step in the right direction, according to Quinn Kepes, a US researcher who last year completed extensive fieldwork (pdf) investigating Peru's illegal gold trade.

However a large proportion of that gold is laundered -- given fake receipts guaranteeing it was sourced from legal mining concessions -- before it reaches the airport, meaning formal companies export large quantities of illegally sourced gold through official channels. For instance, Universal Metal Trading, known to be one of Peru's major exporters of illegal gold, transported more than 19 tons of gold to Switzerland in 2011 via the airline KLM, according to government figures.

"In many cases, by the time the gold is making its way out of the country, it is already being passed off as 'legal,'" said Kepes.

SEE ALSO: Peru News and Profiles

Inspections by the teams will only catch gold that has not been provided with fake receipts, and will certainly not be able to affect the profitability of the illegal supply chain as hoped by Urresti. To do that would require catching the "acopiadores" (gold brokers who make the fake receipts), and to do so would require cracking down on corruption among regional officials and security forces, which is an immense task.

In any case, as pointed out by Kepes, "Just like drugs, the smugglers will adapt, so what's really needed is to get to the source -- where the [illegal gold] is produced and extracted."

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