Textiles Contraband Surges in Colombia as Convenient Money Laundering Tactic

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Fashion continues to fuel money laundering in Colombia, generating millions in losses for the country’s textile industry.

During the last few days in September, several anti-contraband operations raided stores in the neighborhoods of Los Mártires and 7 de Agosto in the capital city of Bogotá, leading to textile seizures valued at more than 10 billion pesos (some $2.6 million). 

Some 322,000 articles of contraband clothing were seized in a joint operation by the police, the army, the Attorney General’s Office and the National Tax and Customs Department (Dirección de Impuestos y Aduana Nacionales – DIAN). Apparently, the merchandise belonged to a criminal gang linked to the National Liberation Army (Ejército de Liberación Nacional – ELN) and the Urabeños, Noticias Uno reported.

In a report earlier this year, the magazine Dinero estimated that money laundered through contraband in Colombia was now equivalent to 7.5 percent of the country’s gross domestic product (GDP).

SEE ALSO: Textiles and Organized Crime: How Everyday Products Turn Criminal Profits

The deputy director of support management for the Fiscal and Customs Police (Policía Fiscal y Aduanera – POLFA), Lieutenant Colonel Hernán Cortés Dueñas, indicated in January this year that “drug trafficking is being paid with contraband goods, and this criminal dynamic connecting the two is particularly serious for a country like ours that has 70 percent of the world’s coca leaf production.”

Between 2018 and 2019, Colombia experienced a 337 percent increase in textile contraband, according to statistics from POLFA.

InSight Crime Analysis

The smuggling of clothing began to take force during the 1990s as the Colombian economy expanded. The free trade zone in Colón in neighboring Panama became a money-laundering paradise thanks to contraband smuggling, as traffickers bought large quantities of textiles with tax benefits before smuggling them into Colombian territory.

Room for further textile contraband schemes came with the start of a free trade agreement between Colombia and the United States in 2012. In 2016, the Sinaloa Cartel, for example, reportedly laundered criminal proceeds by smuggling Chinese textile goods into Colombia by way of the United States, thanks to the benefits derived from the free trade agreement.

SEE ALSO: Sinaloa Cartel Laundered Money in Colombia Using Textiles: Report

The textile sector, a key Colombian industry, has been negatively affected for several years by the massive arrival of Asian clothing. These items enter the market with a value set at lower than the production price of the domestic textile industry. According to POLFA, the Colombian textile industry is losing about $3 billion per year due to contraband. 

This is not a problem unique to Colombia. In Mexico, two out of every three articles of clothing purchased in the country entered illegally, while in Argentina, textile goods and illegal commerce flow freely across the country’s borders with Bolivia and Paraguay.

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