17 June 2005
United States Breaks Up Colombian Drug Money-Laundering Ring
Illegal peso exchange used to funnel drug money, U.S. drug agency says
By Eric Green
Washington File Staff Writer
Washington -- The U.S. Drug Enforcement Administration (DEA) announced it has broken up a Colombian drug money-laundering ring, resulting in the arrests of 36 people and the seizure of over 21,000 pounds of marijuana, 947 kilograms of cocaine, 7 kilograms of heroin, and $7.2 million in illegal profits.
The DEA said in a June 14 statement that the dismantling of the money-laundering ring occurred under "Operation Mallorca," a 27-month investigation that targeted alleged Colombian-based money brokers Gabriel Martinez, Farid Chain and Edgar De Castro. Chain and other targets in the investigation were arrested in Barranquilla, Colombia, and indictments were returned against four businesses in New York.
The DEA credited the Colombian government's Department of Security for helping to break the case.
Those involved in the money-laundering ring, said the DEA, funneled drug proceeds through the Colombian Black Market Peso Exchange.
The DEA described that exchange as a system in which drug traffickers sell U.S. drug proceeds to brokers for pesos. Brokers then sell the drug proceeds to Colombian importers who purchase goods in the United States and elsewhere. By purchasing the U.S. dollars on the black market exchange and not through Colombia's regulated exchange system, the importers avoid Colombian taxes and tariffs, gaining significant profit and a competitive advantage over those who import legally, said the DEA.
DEA Administrator Karen Tandy said her agency is targeting the financial networks of drug cartels "like never before" to bankrupt traffickers and money launderers. "In Operation Mallorca, we followed the money around the globe and into the hands of major Colombian drug traffickers," she said. "We've shown the Black Market Peso Exchange for what it is -- the largest known drug money-laundering mechanism in the Western Hemisphere."
Tandy said the DEA denied drug-trafficking organizations over $500 million of their profits in 2004 alone. She said the drug seizures represent an increase of 40 percent over 2003 and severely affect the ability of drug traffickers to produce, transport and distribute drugs into the United States.
It is understood that major drug traffickers have "insulated themselves from their drug distribution networks, but remain closely linked to the proceeds of their trade," said Tandy. "Operation Mallorca is a testament to our focus on the financial side of the drug business."
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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