Illegal mining and money laundering threaten Peru's formal economy
A Chilean researcher warns that between 3% and 4% of Latin American GDP is linked to organised crime. Illegal mining could escalate alongside the price of gold.
Organised crime infiltrates formal economy and illegal mining could continue growing
Money generated by criminal activities now circulates within Peru's and Latin America's formal economy once it undergoes money-laundering processes that make it difficult to trace its origins. Infobae.com reported warnings from Juan Andrés Medel, associate researcher at the Chair of Security and Globalisation at the Institute of International Studies at the University of Chile, who took part in the discussion forum "Illicit economies: the hidden cost for competitiveness and investment in Latin America", organised by the Commission to Combat Illicit Trade of the National Society of Industries.
"Money, once it manages to be 'laundered', integrates into the system", Medel said during the meeting. The researcher estimated that between 3% and 4% of Latin America's GDP is linked to organised criminality in some way, although he clarified that quantifying that proportion with precision is complex given that the flows already blend with apparently legal activities.
The absent State as a risk factor
For Medel, the expansion of illicit economies cannot be explained solely from a police perspective. Criminal organisations establish themselves primarily in territories where the State has limited presence or has failed to guarantee basic services, investment or formal employment.
"There is a challenge because they are utilising spaces where the State should have been present and was not, or was there in poor form", the researcher pointed out. Medel stressed that these organisations do not seek to directly confront institutions, but rather to exploit the gaps these leave behind.
"What can we do when the only one to reach those areas was organised criminality? We cannot blame that population when the State failed to arrive to offer education, housing or investment", he stated.
Illegal mining linked to gold prices
One of the areas of greatest concern identified by Medel is illegal mining, an activity that has gained ground in different zones of Peru and the region in recent years. The researcher warned that the trend shows no signs of reversing.
"I would say we are facing a scenario that will escalate. Statistically, we have been observing that there are many criminal groups that are more interested and advancing towards illegal mining. And this will probably be closely linked to the price of gold", Medel indicated.
The phenomenon is also not confined to Peruvian territory: other countries in the region face similar problems, particularly in areas remote from capitals and with lower institutional capacity.
Corruption: the official who seeks out crime
Medel also addressed the link between corruption and organised crime, noting that recent investigations have found cases in which the initiative did not come from criminal networks, but from public officials themselves.
"It was the public official who went to seek out organised criminality. Therefore, they were already corrupt previously", he stated. The researcher extended that perspective to the private sector, where companies can be used to launder assets or channel illicit financial flows.
Economic cost: seven times more spent on security than on innovation
The specialist placed the problem within the framework of regional development. According to him, Latin America devotes seven times more resources to security than to innovation, a proportion that illustrates the direct economic cost of tackling organised criminality.
Medel recognised the need to strengthen prosecutors' offices, financial intelligence units and police forces, but warned that those resources compete with investments aimed at growth and productivity. In view of this, he proposed reinforcing integrity and probity controls in both the public and private sectors, as well as improving coordination between the State, businesses and civil society.
The discussion brought together representatives from sectors such as textiles, metalworking, consumer goods and tobacco, alongside researchers, academics and members of the Peruvian industrial association. Asset laundering and organised crime, Medel clarified, are closely related phenomena but not identical: the former can also originate from crimes committed outside organised criminal structures.
Source: Google News PE — Crime