Colombian and Mexican drug traffickers are likely using Uruguay for money laundering, according to a United States report, underscoring the country’s growing appeal for international criminals.
Uruguay is “vulnerable” to money laundering partly because of a “highly dollarized economy”, according to the State Department’s 2013 International Narcotics Control Strategy Report, noting around 75 per cent of deposits and 50 per cent of credits are made in US dollars. Some laundered money is thought to be linked to drug trafficking organizations, among them Colombian and Mexican criminal gangs, according to Uruguayan officials. Responding to the report on March 13, Defense Minister Eleuterio Fernandez Huidobro claimed legalizing all drugs would be the best way to deal with the money laundering problem.
The report, released on March 5, also cited the lack of restrictions on capital moving through the bank system as a factor contributing to the circulation of illicit funds. “Porous borders” with Brazil and Argentina and the existence of 13 Free Trade Zones within the country also facilitated the the movement of contraband and counterfeit goods, it said.
The government has proposed a bill legalizing marijuana, though it is facing opposition from a majority of the population.
InSight Crime Analysis
Uruguay has historically had some of the lowest crime rates in Latin America, but in recent years it has been hit by the international drugs trade. Its geographical position between the two major Latin American drugs markets of Brazil and Argentina, combined with its dollarized economy and loose visa and residence requirements, create a welcoming environment for international criminals.
Interior Minister Eduardo Bonomi warned of the internationalization of organized crime in the country in 2010, indicating the presence of drug trafficking groups from Mexico, Colombia and Brazil. Similar concerns over the expansion of organized crime were expressed in 2012. Officials said that Brazilian drug traffickers could move south as their own government cracked down on favela gangs, and police investigated reports that drug trafficking organizations were increasingly using Uruguay for cocaine processing.
Battles between local gangs for control of domestic markets has driven up violence, with the country’s homicide rate almost doubling from 2011 to 2012 and continuing to rise in 2013.
Dollarized economies, porous borders, and free movement of capital are all factors that helped make Ecuador and Panama hot-spots for organized crime. The Revolutionary Armed Forces of Colombia (FARC) uses both countries for refuge, strategic planning and the movement of drugs and arms. International criminal groups take advantage of Ecuador’s extremely lax visa regulations to traffic people to the United States, as well as maintaining drug routes through the country. With a similar set of conditions in place, Uruguay could become another regional hub for organized crime operations.