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Guatemala’s Latest and Most Profitable Export: Dirty Money

Article Summary:

In Guatemala dirty money moves quickly and travels far. It leaves in the luggage of hundreds of men and women recruited by criminal organizations bound for banks as far away as Panama. All of this money should raise money laundry alarms, but little is being said or done to fight the growing trend of dirty money exportation in Guatemala.

Photo Credit: Insight Crime

Original Article Text From Insight Crime:

Giving the Green Light to Dirty Money: Guatemala

In Guatemala, dirty money leaves the country in tourist class, in the luggage of hundreds of men and women recruited by criminal organizations that export bills of illegal origin. The Public Ministry has identified five networks that move hundreds of thousands, or millions, of dollars.

The traffickers transport cash as far as Panama, which should raise money laundering alarms in the banking system and lead to questions that the owners of the money wouldn’t be able to answer without ending up in prison. But if something goes wrong, only the money runners are captured. The owners remain in the shadows, anonymous and free, and from there they recover the lost money — sometimes through hired assassins. The Public Ministry links the majority of money-laundering cases to drug trafficking.

Scene 1: The Ex-Police Officer
The detective recognized a face among the people detained that day in La Aurora international airport, in 2011. Since mid-2010, it had been routine to apprehend between 30 and 50 people traveling almost daily with some $9,500 in cash — $10,000 is the maximum amount that one is allowed to take out of the country without declaring it in the tax agency·(SAT) and IVE form. When the detective approached, he realized that the person he recognized was an ex-policeman who was discharged in 1997, when he failed the renewal exam to pass to the then-new National Civil Police (PNC).

- And what are you doing in this? – the detective asked his ex-colleague.

- Well, look, there’s nothing else for me to do – responded the former police officer. He told the detective that he hadn’t been able to earn a salary sufficient to care for his family, and so he now worked as a money runner.

- And who does the money belong to, then? – the investigator asked him, knowing that the investigation would go nowhere, because his ex-colleague and the rest of the group (who didn’t want to speak) hadn’t committed any definite crime.

- This is a little bit of everything – responded the ex-policeman candidly – there’s money from congress members, ministers, and drug traffickers.

Bit by bit, the detective put together the pieces of what emerged as a money-laundering business that sent contraband money to Panama for a motley group of clients. Soon, he uncovered other details by checking passports and interviewing other travelers. Sometimes the groups were from just one state — Alta Verapaz, Escuintla, etc. Although the majority were from the capital, over time he detected groups from all the states in the country. And not only that; there were also groups organized by municipality and even by neighborhood. “There were low-income individuals, entire groups from Villa Canales, Villa Nueva, Amatitlan, and even Boca del Monte,” he revealed. But why?

“Simple,” says the detective, “because they come recommended.” He explains that the recruiters are given the task of contracting people they can trust, acquaintances who “aren’t going to do them wrong.” So they call their cousins, neighbors, and friends. “They communicate through text messages, ‘we’re about to begin working, get ready,’” he adds. He read similar messages in the cell phone of one of the couriers who had already traveled several times. Some do it twice a week — as many as eight times a month. The detective disclosed this information in exchange for anonymity.

Monitored Handover
According to testimonies collected in police investigations, after the recruiter organizes the group with each person carrying about $9,500, they call everyone to assemble near the airport. They are picked up in different vehicles, in which they are given the money, generally in $20 bills. “No one counterfeits bills that small because they aren’t worth the work, so they are much more secure,” explains the detective. The money is put in a briefcase with clothing for two or three days, the only baggage that the travelers carry. After receiving the money, the runners are taken to the airport for their flight.

“If they carry a little under $10,000, they receive the flight and $200, of which they are only given half in Guatemala,” states the source. “They receive the other half when they arrive in Panama; there they go to a five-star hotel to deliver the money in a room, then they go to a cheap hotel to spend the night, and then they return to Guatemala. And that’s how they earn a bit of money.” For traveling once they earn some 1,560 Guatemala quetzales ($200). If they fly to Panama eight times a month, they earn at least 12,480 quetzales ($1,600). Each passenger covers his or her own hotel expenses. Some networks pay between $400 and $2,000 per trip, based on the amount of money transported.

The detective reveals that an “eye” accompanies the group. This is a traveler who does not carry any money. Their mission is to ensure that the couriers board the plane and arrive at the designated hotel to hand over the money. One of the five-star hotels where the couriers deliver the dollars has among its associates a Colombian millionaire declared non-grata in Panama, according to a source within the Public Ministry. But this is just one of the delivery points that is under a joint investigation by Panamanian and Guatemalan authorities.

The police baptized this type of movement as “ant trafficking.” If each group involves 30 to 50 people, the group transports $285,000-$475,000. “It was a fortune! They took out millions. The Copa flights to Panama were full,” says the detective, alarmed. “But we couldn’t detain anyone because there wasn’t enough of a legal base; they told us that they were traders that were going to buy electrical appliances. The women said that they were going to buy cosmetics, handbags.” But the interrogations didn’t last long. None of the passengers ever missed their flight.

The majority of the travelers are Guatemalan, men and women similar in size, according to the source. “There is the occasional Colombian, but when they are very dark we see that some are Ecuadorians or Peruvians, some Venezuelans and Costa Ricans, and they rotate in that fashion,” he states. “The majority of the foreigners are men, and they travel with larger sums. They come to Guatemala for three days or a week and tend to stay in hotels in zone 10, in the Quinta Real on the highway to El Salvador, or in the Tikal Futura hotel.” Their ages range from 20 to 60 years old.

Large-Scale Transfer
The police detective says that the ant trafficking·method declined after the first round of elections in September of 2011. Rolando Rodenas, head of the Anti-Money Laundering Prosecutors Office, contends that it continues, and that through this method at least $4 million leaves the country each month. The method appears infallible. Although the cases occur in the airport, the Director of Social Communication at the General Board of Civil Aeronautics (DGAC), Oddra Lacs, states that the identification and arrest of the launderers is the responsibility of the union of Police of Ports and Airports (DIPA), and not the DGAC. And although some traffickers have been able to mock·the law, Rodenas maintains that “the job of the good police in the airport” has discovered how these structures operate.

The police detective says that the movement of large sums continued parallel to the ant trafficking method, but less frequently. He adds that the travelers deliver a suitcase to their contact a day before leaving the country. The contact returns it to the courier in the airport, after inserting a double pocket (among other methods) in which to hide the money. “From that moment, they are under surveillance,” says the detective.

In October 2011, Ricardo Dieguez Garcia, a 61-year-old Guatemalan (a resident of the Alameda III neighborhood in zone 18) was apprehended while trying to carry $80,000 to Panama in cigarette packs. One month later, Adriana and Karla Mendez Montes, two sisters from Costa Rica, were stopped as they tried to travel to their country with $70,174 hidden in their luggage. Just 10 days later, a couple — Luz Lara Martinez and Manolo Diaz Gonzalez, 26 and 22 years old, respectively — were arrested on a plane that would have taken them to Panama. Authorities confiscated $1.1 million from the pair.

On January 30, 2011, Genovevo Perez Medina, a 40-year-old Mexican, was arrested in the airport while carrying $257,000 in his luggage. However, he was not heading to Panama. He stopped over in Panama after flying out of Lima, Peru, and his final destination was Guatemala.

On March 9, 2011, Trinidad Claudio Sequen, a 39-year-old Colombian, did not even arrive at the boarding zone. Authorities discovered that he was carrying $25,500 undeclared ($8,000 in a double pocket in his suitcase; $5,000 hidden in his clothing; and 12,500 in his stomach, in latex capsules). His trip from Cali, Colombia, was foiled. Just 12 days later, Juan Cayetano Perez Laparra, 41, was also captured in the airport while carrying at least $10,000 in latex capsules in his stomach, another $2,980 hidden in his baggage, and $100 in his pants.

The detective suspects that most of the money that is confiscated comes from the profits of drug traffickers. In 2011 alone, the National Civil Police reported having seized $3.2 million in cash from drug traffickers — or 25 billion Guatemalan quetzales.

Undesirable Consequences
Rodenas, who has been the head of the·Anti-Money Laundering Prosecutors Office·since February 2011, reveals that before that month numerous people were released without the money they were carrying being confiscated. This was the case with two Colombians detained in 2003 in zone 14 of the capital with $14 million, whose money laundering crime was commuted for personal concealment. They were released on bail.

“The situation is complicated because in order to arrest a person and begin the legal process for money laundering you had to prove that there had been a prior crime,” explains Rodenas. That is to say, that the money was obtained illegally. “And the prior crime is not always established.” Rodenas maintains that the discrepancy between the detainee’s economic profile and the money that they carry, and the lack of proof that the money is clean, justifies the arrests. “It’s necessary to look at the entire context,” he adds.

Article 25 of the Law Against Money Laundering says that sums of money exceeding $10,000 must declared when taken into or out of Guatemala. Article 4 of the law has a provision that sentences the criminal to between six and 20 non-commutable years in prison, and confiscates the money. The penalty is greater if the detained individual is a public sector employee. Foreigners that are imprisoned for this crime are sent to their country of origin after completing the sentence.

Those who remain at large, but without the money in their hands, are not safe. A MP investigator says that not much is said about the outcome for the runners who lose the money in a seizure, because they flee with it, or because they are assaulted. In small and large scale money laundering, someone is always watching over the couriers and the money. The recommendation system used to recruit couriers also means that the recruiter shares the responsibility, and sometimes the punishment. The organization will know where to find them and where their families live.

“There are cases of people identified as money runners that have disappeared, and at least one that was killed,” says the Public Ministry investigator. “We know that in some cases, there are police officers that protect the money and keep watch over those who transport it; others collect the money, reporting it as lost or stolen, or act as hired assassins against any transporters that fail. If they don’t show up, they go for the runner’s family members.” The Public Ministry and the International Commission Against Impunity in Guatemala (CICIG) are carrying out legal procedures against police for extrajudicial killings, although none have been linked to this type of case yet.

In 2009, authorities seized about $4.5 million in the airport. The amount increased to about $7 million in 2010, and reached $9 million in 2011.

The police detective states that the shipment of large quantities, which tends to be only in $100 bills, has been happening for at least 10 years. He also says that the ant trafficking·method was not really used between 2007 and 2009. “There were military officials and other retired officers that facilitated operations (the shipment of larger quantities of money), who later disappeared, but with the new government, some have returned.” Nevertheless, Lacs pledges that no DGAC report shows that the employees that began to work in the airport in 2012 had worked there under previous administrations.

Scene II: Illegal Money Declared
Some money launderers are so audacious that they officially declare the money that they are carrying, pass through security controls, and board a flight towards Panama without breaking a sweat. Rodenas indicates that the sums declared exceed $50,000, “because the law doesn’t require that they reveal the origin of the money” in the SAT and IVE forms.

A detailed examination of the information presented on the forms yields several findings, according to the authority: a) the passengers pose as businesspeople or legal representatives, and register addresses that belong to cardboard businesses; b) on other occasions, the address corresponds to a notary office, and several forms show the same address although the individuals filling them out say they represent different businesses; c) in some cases, the passengers registered on the forms as business representatives appear on other forms as notaries of different businesses, and d) the accounting records that are traceable because the form shows a real business or address indicate little to no money movement in the accounts, which is inconsistent with the generation of the $50,000-$100,000 declared on the form.

By the time the Public Ministry recognizes that a form has false information or shows irregularities, it’s too late. The traveller is already far away. However, Rodenas says that “the outflow of declared money has decreased” due to effective police work in the airport and the systematization of gathered information that allows them to create profiles of the laundering structures. “Ninety-nine percent of the reports in the IVE come from there,” he says, referring to the cases of declared money in the airport. “The information on the forms produces indices with which to investigate unusual or suspect situations.”

Rodenas admits that these criminal networks know how to use loopholes in the law. “We are almost certain that the money is illicit because what serious businessperson is going to travel with piles of bills in their luggage?” he asks. “If the money were obtained legally, and they had nothing to hide, they would do an electronic money transfer to the country that they are traveling to.”

The police detective says that two traffickers from the Veliz Palomo organization traveled in that way. This is a network that the Public Ministry dismantled in 2010, which had sent at least $350,000 to Panama (the product of extortion and drug sales). By September 2010, the ministry had arrested 35 members of the organization, including an assistant prosecutor who allegedly helped them by trying to impede the investigation. They began with ant trafficking, with about 400 people carrying money in small quantities to Panama, and ended declaring larger sums.

“There were two women in the Veliz Palomo organization that always traveled to Panama with $9,000; later, each one of them began to transport $50,000, $150,000, and up to $250,000, and they declared the money on the forms,” says the detective. “Both of them said they were businesswomen.”

On February 15, 2011, 48 members of the organization, including a Panamanian, were convicted with prison sentences ranging between three and 56 years on charges of money laundering, among other crimes. Only one of the accused went free.

Scene III: Protocol and Private Flights
In July 2011, two employees of the·Office of Judicial Protocol·(OJ) — Jose Guerra Aldana and Luis Vallejo Guerra, 28 and 25 years old respectively — were arrested for allowing individuals who, disguised as public employees and carrying false identification, used the protocol area in La Aurora Airport to remove large quantities of money from the country. The arrests were carried out by security officers working for the OJ, and the suspects were accused of money laundering, conspiracy, illicit collaboration, and abuse of authority. These arrests reduced — nearly eliminated, according to Rodenas — the transfer of money through the security area.

On March 29, 2011, police captured four people that had been linked to using the protocol area of the airport for illegal money relocation to Panama, Costa Rica, and the United States. One of them, Walter Estrada Hernandez, 43, was a delegate for the Foreign Ministry, and is accused of abuse of authority, money laundering and illicit collaboration. Miguel Lopez Castellanos, 34, supervised “Finger International,” and is accused of abuse of authority, none-payment of duties, and obstruction of justice. Edgar Alvarado Merlos, 39, is accused of a special case of tax fraud, perjury, and illicit collaboration. Mario Alfredo Santizo, 18 years old, is accused of racketeering and falsification of documents. Although the Public Ministry divulged that the network had taken at least $10 million out of the country, by April 2 Estrada Hernandez and Lopez Castellanos were free on bail (of 10,000 ($1,300) and 2,500 ($323) quetzales, respectively), although they remained linked to the investigation.

The police detective recalls that between 2010 and 2011, following the arrival of a group at the registry area before boarding, airport scanners detected what appeared to be packets of bills in the luggage of the travelers. “They had letters of recommendation from everyone; they were untouchable,” explains the investigator. “I remember that one of them dropped a credential, and he reached out quickly to pick it up, but before he did I saw what looked like the emblem of the National Palace of Culture. I didn’t have time to read any more.” The group went on without trouble.

The most scandalous case was that of Gloria Torres, sister of the ex-first lady Sandra Torres in 2011, which the morning newspaper elPeriodico and Plaza Publica reported last year, when authorities announced a warrant for the arrest of Gloria Torres and her two daughters for money laundering and defrauding at least two municipalities. DGAC and Foreign Ministry documents published by both sources show that the employees in the security area notified the supervisor of the international area as well as the general supervisor of the airport that six people using the systems at the request of Gloria Torres carried money hidden in their bags. They reported that they had not detained them because they were backed by the then-first lady, Sandra Torres, and her sister Gloria. Estrada Hernandez and Lopez Castellanos, detained in March and released in April, are tied to this case for not preventing the departure of those travelers although they knew that they were carrying undeclared cash.

The reporters of this case had access to a document from Congress’ Protocol Directorate, in which one of the runners, Ramiro Salas, was identified as a member of the Secretariat of Administrative Affairs and Security as well as the pilot for Gloria Torres. ElPeriodico reported that the group had made at least 15 trips to Panama. An investigator following the case said that Torres and her accomplices also carried money to Belize and presumably transported funds to other destinations from there.

While the Public Ministry states that it is still investigating the ties between Torres and the detained runners, a detective that followed the case says that the money taken out of the country came from several owners, including Gloria Torres, and alleged drug trafficker Juan Ortiz, alias “Chamale” or “Hermano Juan.” When Ortiz was captured on March 30, 2011, and he was unprotected, he requested the aid of two people: one of them was supposedly Gloria Torres; the other was the then-Minister of Defense, Abraham Valenzuela, who was separated from the charge for this reason.

Lacs explains that in 2012, “the security area depended on the Foreign Ministry for diplomats, and for flight security personnel (AVSEC) for heads of state.” However, she says that all users of the security area pass “through all the migration, customs, and security procedures, with no exceptions.”

Unpunished Passengers
In 2004, the police investigator was sent to examine a private plane arriving from Chile. He received the information from a diplomatic delegation from that country, which had communicated the suspicion that the plane might be transporting something illegal. When the plane touched down, the detective boarded and asked the passengers to remain in the plane and give him their identification documents. The detective says that when he opened one of the passports, he was shocked. There he read a last name that indicated that the individual might be related to a high-ranking official from the executive branch. Almost immediately the passenger gave him the answer he anticipated:

- Ok, and you don’t know who I am? – he yelled.

- Yes, but what’s the problem? If you all don’t have anything to hide, I don’t see the inconvenience in my reviewing your IDs – the investigator responded calmly. The subject calmed down, and said nothing. The investigator and other police officers examined the plane, but found nothing.

The detective says that upon returning to his office he called the diplomatic delegation and told them what had happened. Their speaker told him that they already knew who was traveling in the plane, that they had heard the travelers were taking money towards South America, and they had hoped to find some evidence in the plane. The investigator asked why they had not ordered the arrest of the individuals, if they already knew what was happening. “Because they are untouchable without proof,” responded the speaker.

The investigator says that between 2006 and 2007, the security and diplomatic area of La Aurora Airport was used by individuals identified as deputies from the Central American Parliament, and that the brother of one of them carried packets of money, revealed by the security scanners. “They had credentials (whose legitimacy couldn’t be proven), and letters from superior authorities giving them permission to depart.”

The detective added that in 2011 the number of passengers declaring that they were traveling with amounts greater than $100,000 increased, and that they used private planes. “Here, the airport is synonymous with money,” he states.

Scene IV: Laundering by Land, Money on Wheels
The money laundering land routes in Guatemala are linked to aerial smuggling towards the south of Central America. “We discovered that the objective of the land routes was to move money towards the capital, where it could be taken out of the country by flights from the airport,” explains Rodenas. The money is brought to the country from Mexico. By February 2012, authorities had detected “54 unofficial crossing points for vehicles, according to the·Guatemala-Mexico·International Comission of Boundaries and Water,” says Werner Ovalle, a consultant from the Central American System of Integration (SICA). There were many more blind spots for people crossing on foot.

In March 2011, in Mazatenango, Suchitepequez, a man driving a Toyota pick-up was detained. Under the truck bed (palangana) he was carrying $2.7 million. The man, whose criminal record was clean, entered the country through a blind spot on the Mexican border. Last January, the police intercepted another suspect in Suchitepequez with at least $90,000 hidden in his vehicle.

The Public Ministry reports that in August of 2011, in Amatitlan, the police arrested a married couple — the husband was from Ecuador and his wife from Guatemala — who were carrying $8,000 on their persons. The couple was transporting another $58,000 in the spare tire of the vehicle. They were extradited and, according to the Public Ministry, were later found dead. The official investigation suggests that the couple was associated with a woman from Quetzaltenango who is married to a sailor (lanchero) and associated with drug trafficking.

At present, Rodenas does not believe that there are defined smuggling routes. It appears that there is no boss. Traffickers enter the country from Mexico any way they can, in all sorts of vehicles — from sleek pick up trucks to cars that are at least a decade old.

Logic dictates that the land routes are less monitored and therefore preferred by smugglers. But the greater risk is losing the money in a robbery or assault, on a path that takes much longer to travel from Guatemala to Panama. The police detective affirms that this is why traffickers prefer to send the money by plane. Moreover, the consequences of losing money forces traffickers to look for the safest and quickest routes.

Scene V: A Test of Strength Between Traffickers and Authorities
At least five structures pull the strings in the money smuggling industry. An investigation by the Public Ministry helped authorities identify the heads of the operations: one “very violent” Mexican women, according to an investigator from the Money Laundering Unit who prefers not to be named; a Colombian from Cali who was captured in April 2011 in zone 13 with $429,000, identified as Julian Andres Jaramillo Camposano, 25, who is linked to drug-trafficking; a couple consisting of the Panamanian Waldo Curtis (with an arrest warrant in Panama for laundering $1 million) and the Guatemalan Tania Zambrano; and three Guatemalan suspects, two of whom control the fourth structure, and the other, the fifth structure.

Aside from the Colombian, no other big fish has been caught (except for case of Veliz Palomo), but there are at least 20 warrants for the arrest of suspects associated with ant trafficking, and at least half of the people linked to carrying undeclared money out of the country have been detained. The authorities have between 135 and 140 arrest warrants pending execution, as well as no less than 250 open cases. They still have some 65 cases from 2010. From 2011 alone, they have another 225 cases, and by the first week of March the count for 2012 approached 27.

The attorney general has five official assistants and four agents for the entire country. In theory, every official who receives a report of money laundering should send the case to the Anti-Money Laundering Prosecutors’ Office (within a stipulated time frame), but they do not always do so, and sometimes open the case in their jurisdiction.

Lacs says that in the first 60 days of the current government, authorities detected “more passengers with money, jewelry, and drugs than in prior years,” due to inter-institutional actions that encourage training to international standards. However, until the beginning of March, the attorney general calculated a monthly average of money laundering cases less that was less than 2011. Lacs also says that, in order to make the measures more effective, the US Embassy in Guatemala donated equipment “unique in Central America,” which detects illicit substances or contraband money.

The new equipment, a modern scanner, was installed in the police’s anti-drug agency (SGAIA, formerly the DAIA) in La Aurora International Airport. On March 28, 2011, it was inaugurated by Secretary of State William Brownfield during his visit to Guatemala.

But the equipment only helps to arrest of the couriers, and not those who own the millions of laundered dollars. It detects money that, according to the ex-police officer who was traveling to Panama last year, belongs to drug traffickers as often as to public officials — money that has been printed or robbed with impunity.

The preliminary results of a study by La Red (an organization directed by former vice president of Guatemala Eduardo Stein) about money laundering through bank transactions, points out that the main source of money laundered electronically is the government (state funds obtained through corruption). This is followed by money from extortion (of small businesses, airlines, or households) and then drug trafficking. This means that, until now, drug smugglers have found an alternative way of transferring money, which may explain the ant trafficking method and trafficking of large sums of money (declared or undeclared).

Other investigations focusing on taxes, assembled in an article of the Global Integrity Report, name tax evasion as the principal source of contraband money, together with drug trafficking and corruption.

But although the authorities have gathered important information, it is not enough to assume that “if the river is making noise, it’s because it carries stones,” or that the results will be obtained. For Rodenas, “the stones have to make noise, and we have to prove that they exist.” According to the official, the only limit on investigating the money laundering ringleaders is imagination, which is needed to stay one step ahead of them. “These people are not unintelligent, but nor are they perfect,” he asserts.

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