In the heart of the commercial sector of the Sabana Grande neighborhood, in Caracas, Venezuela, more and more vendors have been forced to acquire electronic equipment to identify counterfeit dollars.
“I’ve personally spotted fake dollars — I recognize them by the texture,” says Consuelo*, the manager of a store in the area. “When I grab them, I know right away that they are counterfeit. I’ve picked up $100 and $20 bills.”
In visits to Caracas and areas near the Colombian border, InSight Crime found dozens of traders and currency sellers who, like Consuelo, are on constant alert and expressed concern about the circulation of counterfeit dollars in Venezuela.
The use of counterfeit currencies really took off in 2017, when the country’s currency plummeted and dollars began to be used as a more reliable currency. By May 2023, according to figures from the consulting firm Ecoanalítica, dollars were used in 53% of all commercial transactions nationwide.
But, while this crime is widespread inside Venezuela, the flow of counterfeit banknotes is coming from abroad.
According to the US Secret Service, as well as Colombian authorities who spoke to InSight Crime, Colombia and Peru are primarily responsible for the production of counterfeit dollars trafficked into Venezuela and the region. With its neighbor a major counterfeit dollar producer and the country’s financial institutions suffering from the economic crisis and rampant dollarization, Venezuela is the ideal breeding ground for counterfeit dollars.
Dollarization Attracts Counterfeiters
Having one of the highest inflation rates in the world and the ongoing depreciation of local currency has led to a massive influx of dollars into Venezuela and opened the door to a parallel market where counterfeit dollars can circulate without major restrictions.
In June, the local media El Carabobeño, published a series of recommendations to warn the population about an apparent nationwide wave of fraudulent $20 bills.
A month later, the Bolivarian National Guard (Guardia Nacional Bolivariana – GNB) captured a Colombian man transporting approximately $150,000 worth of counterfeit dollars through a Colombia-Venezuela checkpoint in the state of Táchira.
But reports of fake dollars had started earlier. In October 2022, Douglas Rico, director of the Scientific, Criminal and Criminalistic Investigations Corps (Cuerpo de Investigaciones Científicas, Penales y Criminalísticas – CICPC), said that the CICPC had received between four and five reports of counterfeit dollars per month so far that year.
To introduce the counterfeit bills into Venezuela’s legal economy, a local vendor explained to InSight Crime that criminal networks alter lower denomination bills and pass them off as higher value bills.
“In stores, they hand over a bill that, on one side is for $100, but the machines read them as $20,” the merchant explained.
A Colombian judicial official, who preferred to remain unnamed because they have open investigations against counterfeiting networks, said that Colombian border cities such as Maicao, in the department of Guajira, and Cúcuta, in Norte de Santander, are key production areas for counterfeit dollars that are sent to Venezuela.
The purchase of counterfeit dollars manufactured in Colombian regions and end up entering Venezuela is a modus operandi already identified by the criminal investigations branch of Colombia’s national police.
In June 2021, after dismantling a currency counterfeiting factory in Colombian border town, San Cayetano, local police officers explained to El Tiempo that Venezuelan criminal groups ordered packages of counterfeit bills on demand and paid $45,000 Colombian pesos (approximately $10) for a $100 bill.
Several criminal groups control transit routes on the Colombian-Venezuelan border, including the National Liberation Army (Ejército de Liberación Nacional – ELN) and dissident groups of the demobilized Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), also known as the ex-FARC mafia. Although InSight Crime has not found a direct connection between these criminal groups and the counterfeit dollar business in Venezuela, the trade represents a significant opportunity to expand their illicit profits.
The use of counterfeit dollars in Venezuela has been increasing over the last six years, as the country’s currency crumbled due to hyperinflation and failed government economic policies. In 2017, the dollarization of the economy began, with the US dollar providing an alternative to the exponentially depreciating bolivar.
“The bolivar is practically non-existent as a currency in Venezuela today,” said Edison Morales, professor of economics at the University of Zulia.
Faced with an avalanche of dollars that began to circulate nationwide, President Nicolás Maduro was forced to abolish the Law of Illicit Foreign Exchange in 2018, lifting restrictions on buying and making transactions with foreign currencies in the country.
By 2021, the dollar was being used for 55% of transactions in Venezuela.
“Our dollarization is a de facto dollarization, so to speak, in the sense that dollars are used for transactions. But it is not official dollarization, because wages and salaries, for example, are paid in bolivars,” an economist from the Venezuelan Observatory of Finance (Observatorio Venezolano de Finanzas) told InSight Crime, who asked to remain unnamed for security reasons.
It is difficult to estimate the total amount of dollars circulating in Venezuela since the Central Bank does not control them. Approximate figures provided by the firm Ecoanalítica show that the country went from $2.6 billion US dollars in circulation during 2019 to almost $4.825 billion in August 2023.
This increase in the circulation of dollars in Venezuela “is an inviting scene for any mafia that is making fake dollars to join,” added the economist from the Venezuelan Observatory of Finance.
Dollars In, Bolivars Out
While counterfeit dollars are increasingly entering Venezuela, bolivars are in high demand by criminal organizations in the region.
Locally useless, millions of bolivars that went out of circulation in Venezuela increased their value in the region’s criminal market due to the properties of their paper, which is difficult to acquire commercially.
In December 2016, millions of Venezuelans stood in long lines at banks to hand over the 100 bolivar bills that were taken out of circulation under direct orders from Maduro.
The decision to withdraw the banknotes, according to then-Minister of Internal Relations, Justice and Peace Néstor Reverol, was a response to the illegal extraction of 300 billion bolivars, allegedly by international mafias seeking economic destabilization.
But the money extracted in this case was just the tip of the iceberg of bolivars that have appeared in different illegal currency markets in Latin America.
In February 2017, authorities in Paraguay seized approximately 25 tons of Venezuelan bolivars in the city of Saltos del Guairá, on the border with Brazil. According to the local police report, the bills, mostly in denominations of 50 and 100 bolivars, were to be used to counterfeit other currencies.
A year later, in April 2018, the Venezuelan government dealt a strong blow to the illicit networks that controlled the extraction and smuggling of banknotes in the country. Through Operation “Paper Hands,” authorities dismantled a transnational network dedicated to currency trafficking and illegal manipulation of the exchange rate in the border area.
“Several transnational organized crime networks were detected with two purposes: the first, to extract and steal the national money supply; and the second, to impose criminal rates on the speculative dollar,” Venezuela’s then vice-president, Tarek El Aissami, said in a communiqué.
In addition to Paraguay, countries including Colombia, Ecuador, and Brazil also reported seizures of Venezuelan banknotes that ended up being transformed into dollars or other high-value currencies in the foreign exchange market.
“These mafias don’t only use bolivars, but it is easier for them to use Venezuelan bills. In this case, it is easier to obtain the raw material from a money supply that is circulating all over the world and has no value whatsoever,” said the economist from the Venezuelan Observatory of Finance.
In an operation in April 2023, Colombian police arrested two members of a counterfeiting and currency trafficking network that bought bolivars on the Venezuelan border, transformed them into dollars on Colombian soil, and sent them to Ecuador.
This criminal organization, according to a publication in Semana magazine, acquired boxes of Venezuelan banknotes in the border city of Cúcuta. The bolivars were transported to Medellín, where they were subjected to a chemical bleaching process. The paper was then inserted into “offset” printers, which use a stencil to transfer the inked image onto the paper.
To avoid attracting the attention of customs or border authorities, transport networks send small quantities of banknotes to other countries via human couriers, parcel services, or public buses, a Colombian judicial official told InSight Crime.
One of the most recent discoveries of bolivars in the hands of trafficking networks occurred in August 2023, when the GNB arrested five people guarding a warehouse in the municipality of Junín, Táchira. Six thousand bags full of Venezuelan banknotes of different denominations were stored inside.
According to the official report, the money found had the same characteristics as the 100 bolivar bills that were collected almost seven years ago under Maduro’s 2016 decree.
South America’s Top Counterfeit Producers
Long before counterfeit dollars overran Venezuela, there were groups in Colombia and throughout South America practicing this criminal trade.
In 1991, US Secret Service investigator Marino Radillo said that 30% of the counterfeit dollars that were circulating around the world at that time were produced on Colombian soil. The US Secret Service — the agency in charge of investigating and tracking counterfeit US currency — established an office in Bogotá, Colombia in 1996 to create joint strategies with local authorities in response to the increase in the crime.
Throughout the 1990s and the first decade of the 2000s, Colombia was considered the epicenter of counterfeit currency production and trafficking worldwide. Millions of dollars were seized from the “Golden Triangle” of counterfeit currency: Bogotá, Cali, and Medellín. These cities were known for the quality and sophistication of their techniques.
In 2003, Peru entered the fray. According to a US agent interviewed by the BBC, 17% of the counterfeit bills entering the United States in 2009 came from Peru.
By 2013, according to information from the US Secret Service and Peruvian authorities, Peruvian criminal organizations had displaced Colombia as the world’s primary manufacturer of fraudulent currency. In only 10 years, approximately $103 million in counterfeit dollars were seized there.
A Peruvian counterfeiter who was interviewed by National Geographic in 2020 said his organization was capable of producing $6 million in US dollars in 45 days.
A Colombian official investigating this phenomenon, who asked to remain anonymous for fear of reprisals from criminal groups, told InSight Crime that Peru and Colombia’s success as producers of counterfeit bills was a result of their expertise, low costs, and excellent quality, allowing them to beat out any competition.
After more than two decades of operations to curb currency counterfeiting in Peru and Colombia, recent seizures and reports indicate that both countries remain at the forefront of counterfeit currency production in Latin America.
Laser printing, offset, and silk-screen printing have remained the most popular techniques used in the region.
Although Colombia police claim that offset printing is the most popular among criminal networks, an official from the police’s investigative branch who spoke on condition of anonymity said that criminals are migrating to laser printers because they produce higher-quality banknotes more quickly.
Besides the United States, the false dollars are usually destined for Mexico, Ecuador, Panama, Argentina, and in recent years, Venezuela.
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