Kenneth Rijock

Kenneth Rijock

Saturday, September 15, 2012

RAISE COUNTRY RISK ON VENEZUELA AND THE DOMINICAN REPUBLIC

Recent smuggling tracks

The latest US law enforcement information on current trends of narcotics smuggling into CONUS (Continental United States) shows that traffickers, who tend to respond swiftly to law enforcement actions, have now transferred much of their activities from Central America, back to the Caribbean. The United States latest tracking map clearly shows that the Caribbean routes are back once again.

Virtually all of the maritime and airborne smuggling from the north coast of South America is now embarking from port and airfields in Venezuela, or flights from the Colombian frontier that pass over Venezuelan airspace. Only a small number originate from Colombia's Caribbean coast.

The final destination of most of the aircraft and vessels is clearly the Dominican Republic. Honduras comes in second, with approximately 15% of the trips. Haiti, Nicaragua, Panama and Mexico represent but a small number of air and maritime smuggling operations, according to the chart.

When any jurisdiction is flooded with narcotics traffic either outbound or inbound, financial institutions are affected:

(1) Wholesale payment for the drugs generally occurs. Large amounts of cash will be required.

(2) Bribes and kickbacks are generated, to law enforcement, government officials, other recipients.

(3) Payments for storage, transit, port or airport use, and other fees, legal and illegal, occur.

(4) Front companies, to shield the criminal activities, must be maintained.

(5) Money launderers find that the need for their services will increase.

(6) Backhaul of drug profits, through bulk cash smuggling, and placement into local financial institutions will be needed.

All these events operate to raise risk levels for the jurisdictions involved.

For the above reasons, it is submitted that compliance officers who are responsible for calculating risk levels consider that these developments justify raising Country Risk for Venezuela, and for the Dominican Republic.

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