New Digital Currency Used for Money Laundering

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In early March 2016, the website Focus Ecuador published the content of Ecuadorian intelligence reports revealing that transactions made through the Unitary Compensation System (SUCRE for its Spanish acronym) have been used to launder money through shell companies. Created by the Bolivarian Alliance for the Americas (ALBA for its Spanish acronym) in November 2008, the SUCRE is a virtual currency aimed at replacing the dollar in commercial transactions and promoting the expansion of trade among member countries.

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Focus also reported that, in addition to the now-closed Territorial Bank and the Savings & Credit Co-operative, other public and private banking bodies were involved in these transactions. This was confirmed by the Prosecutor, Galo Chiriboga, on August 6, 2015, in response to a request made by opposition Congressmember Andrés Páez. Focus claims to possess documents identifying other institutions involved, such as Banco Amazonas, Banco del Austro, Banco de Fomento, as well as more than 50 companies and dozens of individuals.

In total, transfers worth $324 million were detected between 2012 and 2013. The key company involved in the irregularities is the Global Construction Fund (Fonglocons), which made illegal transfers of $159.9 million. From 2013, by legal order, a balance of $57m has been held in the Ecuadorian Central Bank and has been claimed by the same company.

Between November and December 2015, the Prosecutor ordered investigations into other companies and individuals linked to Fonglocons, including Juan Eljuri Anton and the Eljuri Group; and Nassib Neme Antón, owner of Electrocables and President of the Emelec Football Club.

Focus also reports that, at the meeting of the Economic & Financial Committee on June 10, 2012, the Ecuadorian and Venezuelan Governments were alerted at the highest level to the illegal use of the SUCRE system to commit crimes causing millions of dollars in damage to both countries. This is according to Report 35 from the National Intelligence Secretariat of Ecuador (SENAIN). In Ecuador, these crimes are exposed through misalignments in the trade balance; fictitious exports; and companies that disappear two months after they created and turnover millions of dollars without paying taxes.

The intelligence report also states that, in 2010, Ecuador’s Internal Revenue Service (SRI) discovered that several Ecuadorian businesses with links to Venezuelan companies made large exports to Venezuela with a pattern of ‘overvalued products.’

As explained in an investigation published in 2015 by the newspaper El Universo, the system stipulates that, in the first instance, the central banks of each country charge and pay importers and exporters in the local currency. Then, central banks are offset using the price of the virtual currency SUCRE as a reference. The big players in this system have been Ecuador, with a strong currency (the dollar), and Venezuela, with the bolivar, which has weakened in recent years. In fact, since the creation of the SUCRE, a boom in exports from Ecuador to Venezuela has been recorded.

According to El Universo, the closure of the Territorial Bank on March 18, 2013 alerted authorities to irregularities with the SUCRE: overvalued exports and others that turned out to be nonexistent, even though the company had already charged for them. The head of the Territorial Bank, Pietro Zunino, and its General Manager, Raúl Sánchez Rodríguez, were sentenced to eight years in prison for bank embezzlement.

In June 2013, the Savings & Credit Co-operative was also closed. According to the Prosecutor, the Co-operative made unjustified transactions of $35 million for alleged exports of chemicals to Venezuela. Its executives, Rodrigo Aucay Sánchez and Raúl Carpio Pérez, were sentenced to four years in prison and ordered to pay $70.7 million for money laundering.

Thereafter, the Central Bank of Ecuador (BCE) issued orders to control advance payments to Ecuadorian companies. Previously, since March 2012, the Central Bank of Venezuela (BCV) allowed exporters to be paid in advance, i.e. before the shipment of products.

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