Editor’s Note
This report examines the systemic failures enabling organized crime’s grip on Latin America’s illicit gold mining trade, highlighting a critical lack of regional preparedness.
A recent report on organized crime and gold mining in Latin America provides data on the reasons why countries, the international community, and the private sector have failed to control the boom of a criminal activity for which the region is unfortunately unprepared.
The report, from the Global Initiative Against Transnational Organized Crime, describes how organized crime has co-opted informal gold mining in Latin America, generating enormous illicit wealth, as well as violence, corruption, and environmental destruction.
The research highlights two critical factors: higher risks and lower profit margins for drug trafficking, and an increase in international gold prices, factors that have combined to create ideal conditions for the boom in illegal gold mining. This phenomenon has been most evident in Colombia and Peru, but has also been felt in Mexico, Nicaragua, Bolivia, Ecuador, Venezuela, Guyana, and Brazil.
The figures presented by the Global Initiative are staggering. According to the report, in Peru, illegal gold exports reach US$2.6 billion per year, while in Colombia this business generates about US$2 billion, in Mexico US$500 million, and in Brazil US$400 million. The report adds that approximately 28 percent of the gold extracted in Peru and 80 percent extracted in Colombia are obtained illegally, while in other countries the percentages are between 80 and 90 percent, as recorded in Venezuela.
Perhaps one of the report’s main contributions is its exhaustive description of the numerous national and international mechanisms that could be deployed against illegal gold mining, and its explanation of why Latin America has failed to leverage them to control illegal mining.
Based on research by media and civil society organizations, the Global Initiative examines the role of armed groups, drug traffickers, and other criminal networks in illegal gold mining, ranging from the Marxist guerrilla group the Revolutionary Armed Forces of Colombia (FARC) to the Italian mafia.
The report also describes the many ways crime and mining intersect, from the most basic level, which involves criminal groups extorting mining operations, to more sophisticated schemes, through which mines and the gold trade are used to launder billions of dollars from illegal activities.
Furthermore, the report describes the environmental and human costs generated by illegal mining, which has led to deforestation and mercury pollution, as well as forced labor displacement and sex trafficking.
As the report points out, the tools available to combat illegal mining can be divided into four general areas: legislation in importing and exporting countries, international agreements, private sector initiatives, and civil society action groups. These mechanisms range from internal state laws to United Nations conventions and target labor and environmental violations, corruption, human trafficking, money laundering, financing of armed groups, and supply chain transparency. In addition to these punitive options, they also include mine certification programs as responsible producers and those promoting the ethical sale of gold.
However, the report notes that efforts to combat illegal mining have been countered by numerous weaknesses. International conventions have not been signed, or are not enforced. Legislation fails to keep pace with the evolution of organized crime. Corporations operate with limited and voluntary guidelines, rather than having a true regulatory framework. Certification schemes are often vague and poorly implemented, and efforts to track the supply chain have failed.
Furthermore, according to the report, these mechanisms have not been used in a comprehensive manner. There has been a clear lack of coordination between the public and private sectors and at the national and international levels, resulting in programs full of gaps and redundancies.
In recent years, Latin America has come to realize that what was once considered a minor environmental crime is in fact one of the main sources of income for major criminal actors throughout the region.
As a solution, the report makes recommendations for each level of the illegal gold supply chain and calls for a comprehensive response at each link. First, exporting countries must join forces to prosecute criminal networks through a simplified and better-funded program that allows small-scale miners working without proper permits to integrate into the legal economy. Second, importing countries must compel stakeholders to comply with international human rights and labor standards, meet environmental standards, and hold companies that buy and sell illegal gold accountable. Corporations, for their part, must ensure that their gold is legal, produced responsibly, and complies with international environmental and labor standards.