In 2021, Mexican authorities captured an Asian-Mexican businessman at a Mexican port and seized 23 tons of drugs. The shipping manifest said the businessman was importing “calcium chloride,” but lab results later showed that part of the cargo was fentanyl, the deadly synthetic opioid responsible for tens of thousands of overdoses per year in North America. 

Authorities said they also found cocaine, marijuana, and methamphetamine, as well as other types of unspecified items. And although they did not disclose the amount of each drug they seized, investigators from Mexico’s Financial Intelligence Unit (Unidad de Inteligencia Financiera – UIF) said the network included the businessman, his wife, his daughter, and a series of associates spread across a wide geographic swath.

The businessman was part-owner of a women’s handbag company, as well as two other companies, which the UIF identified simply as company X and company Y. Red flags went up because the handbag company had no employees on its payroll, and between 2015 and 2016, it registered close to $140,000 in deposits, 98% of which were connected to currency exchange operations.

*This article is part of a two-year investigation that tracked the supply chain of precursor chemicals that aid in the production of methamphetamine and fentanyl in Mexico. Read the other articles of the investigation here and the full report here.

Intrigued, the UIF dug further and found that the handbag company had also “coordinated the shipment” of 16 tons of precursor chemicals to an “agro-industrial company.” The agro-industrial company, they found, had three owners, who the UIF believed were front-people working directly with the Asian-Mexican businessman. 

In all, the UIF tracked hundreds of check and cash deposits, as well as hundreds of withdrawals and transfers among and between these different companies in what authorities believed was an effort to shield their illicit imports and launder their proceeds. 

Eventually, they filed charges against the trafficker, his wife, his daughter, and the three third-party owners of the agro-industrial company. They also shut down the companies and seized the assets of 51 bank accounts associated with them.

This should have been a landmark case in Mexico. The problem was that the case was not real. It was part of a case-study, or what they called a “typology,” that the UIF was using to illustrate money laundering related to the synthetic drug industry. 

The irony is that — while this case appears to be based, at least in part, on a real investigation — Mexican authorities have never identified any money laundering cases related to synthetic drugs or precursors in Mexico, according to our public records requests and interviews with officials. Nor were there any cases that had led to asset seizures or forfeitures. 

“I checked everything,” a source in the Attorney General’s Office told InSight Crime in a text message. “There is not a single case.”     

On one level, the dearth of cases is stunning. The United States has been pressuring Mexico to focus more on slowing the flow of illicit synthetic drugs, above all fentanyl. And targeting the flow of money to pay for precursors, as well as the proceeds that synthetic drugs generate, would appear to be an important priority for US investigators, especially given the drug flows emanating from China, the world’s preeminent chemical supplier. Since 2008, the United States has spent over $3 billion in training and equipping Mexican authorities, including helping to stand up the UIF.

But on another level, it has become commonplace for the current Mexican government to downplay the impact of synthetic drugs at home and abroad. While the Attorney General’s Office has publicly recognized the problem, President Andrés Manuel López Obrador and the head of the Ministry of Public Security have consistently denied that fentanyl is produced clandestinely in Mexico, despite ample evidence to suggest otherwise. The government has also downplayed the rising use of synthetic drugs in Mexico, particularly methamphetamine, but also fentanyl.

That attitude seems to have permeated other institutions. In its most recent annual risk report — issued in November 2023 — the Finance Ministry did not highlight any concern regarding the flow of money for precursors, fentanyl, or methamphetamine, or the proceeds obtained therein. 

It was as if the problem did not exist. 

Don’t Follow the Money

It is an overused axiom to say authorities should follow the money. However, the money, in the case of precursor chemicals, is relatively small. 

InSight Crime estimates that synthetic drug manufacturers in Mexico produce a maximum of 4.5 tons of pure fentanyl every given year, and a maximum of 434 tons of methamphetamine to meet the demand of the US consumption market. Based on our interviews with fentanyl and methamphetamine producers in Sinaloa and Michoacán, we estimate that the costs of the chemical substances required to produce these quantities run between $9 million and $22.5 million for fentanyl, and between $83.3 million and $126.5 million for methamphetamine.

Net earnings from synthetic drug sales are also relatively small. InSight Crime estimates the wholesale market for fentanyl in Mexico is between $15.7 million and $40.5 million; the wholesale market for methamphetamine in Mexico is closer to $330 million. Once these drugs cross the border, the prices go up significantly — between $27 million and $67.5 million for the US wholesale fentanyl market; and up to $1 billion for the US methamphetamine wholesale market — but not in relative terms compared to other criminal markets. For example, Mexico’s National Institute of Statistics and Geography (Sistema Nacional de Información Estadística y Geográfica — INEGI) estimates that corruption in Mexico is worth some $700 million. And Global Financial Integrity says criminal activity of all types in Mexico could be worth as much as $62 billion, of which $44 billion may be laundered in Mexico.

Even if Mexico wanted to pursue that $44 billion, it would be difficult. Few governments have the capacity, resources, and stamina to actually do these types of investigations. Even in the United States, where the axiom regarding following the money has been ground to dust, money laundering is not prosecuted often and when it is, few of these cases are related to drug trafficking.

In 2022, the last year for which there is data, the US Sentencing Commission said the US federal courts had prosecuted 1,001 individuals for money laundering. But just 17% of these individuals were charged for laundering proceeds earned from “controlled substances, violence, weapons, national security, or the sexual exploitation of a minor.”

Even big cases that get prosecuted seem to fizzle. In March 2010, Wachovia Bank, which Wells Fargo had recently acquired, paid the federal government a $160 million fine for potentially laundering a staggering $420 billion in drug trafficking proceeds from Mexico through currency exchange centers between 2003 and 2008. But no one from the bank was prosecuted. 

In 2012, the US government levied over $2 billion in fines and penalties from HSBC, a London-based bank, for failing “to monitor” over $670 billion in wire transfers to and from Mexico between 2006 and 2010. And while the company “clawed back” bonuses given to its “most senior AML [Anti-Money Laundering] and compliance officers,” no one was prosecuted.  

In sum, although US agents counted over $1 trillion in potentially laundered funds in that eight-year period, no one saw the inside of a jail cell. 

This problem also arises when investigating precursor chemical flows. A former DEA investigator for Diversion Control, who spoke to InSight Crime on condition of anonymity because they were not authorized to speak, said that financial analysis was almost always done in a reactive way. And when it came to investigating Chinese companies that operate through the dark web or use cryptocurrencies — a mainstay of the precursor chemical and synthetic drug market writ large — US authorities had limited to no visibility.

“It’s like going into a dark wall,” the investigator said.

SEE ALSO: Corruption, Crypto Test LatAm Money Laundering Laws

In Mexico, the record is arguably worse. A 2018 evaluation by the Financial Action Task Force (FATF), an international inter-government watchdog, found that, while the government has a strong AML regime and a good understanding of the threats of money laundering, “it is nonetheless confronted with significant risk of money laundering,” stemming principally from organized crime-related activities. 

Specifically, the FATF noted that the UIF — the intelligence agency responsible for identifying anomalies in earnings statements, financial transactions, company registries, and other means of obfuscating or camouflaging illicit — was not generating a sufficient “volume” of information for the Attorney General’s Office, the government body responsible for carrying out the judicial inquiries. 

For its part, the Attorney General’s Office also came up short. According to the FATF, money laundering “is not investigated in a proactive and systematic fashion, but rather, on a reactive, case-by-case basis.”

The result is the above-mentioned dearth in investigations. Between 2013 and 2016, the FATF cataloged 339 cases. Of these, 103 resulted in the conviction of just 53 people. 

“The figures call into question the effectiveness of investigations,” the FAFT wrote, perhaps understating Mexico’s glaring shortcoming in its efforts to follow the money. 

Money Flows to China: The Prevalence of Cryptocurrencies

One positive the FATF noted in its 2018 report was the UIF’s cooperation with foreign governments in their investigations. At least one of these investigations, a US-led prosecution of a China-based clan, offers a glimpse of how multi-layered synthetic drug networks buy precursor chemicals from China.

In 2018, the US government filed a lengthy indictment against Fujing Zheng and his father, Guanghua Zheng, who are at the top of what it called the “Zheng drug trafficking organization” (DTO), outlining the network’s activities across the globe. The network advertised “custom synthesis” of chemicals and synthetic drugs, and the regular export of at least 36 synthetic drugs and precursor chemicals, including fentanyl, fentanyl analogues, and other synthetic opioids.  

While the indictment did not mention Mexico, Mexican newspaper El Heraldo, citing a leaked intelligence document, reported that the UIF had also investigated the Zheng network.

Through our own research, we found numerous connections between Zheng-owned companies and Mexico. Specifically — via an analysis of supply-chain data using Altana, a company that provides a dynamic map of global supply chains — we tracked one company listed on the indictment, Global United Holdings, that registered small shipments of textiles to two companies in Mexico and one in the United States. 

Another, Shanghai Pharmaceutical Company, which the US indictment identified as the “legitimate face” of the DTO, shipped lab equipment and medical instruments to five different Mexico-based companies, research using Altana shows. This included a vial-pressing machine, a “powder-mixing machine,” pill presses, and chemical mixers. 

Altana’s platform also registered small transactions from another company, Cambridge Chemicals, of bentonite, phosphorous acid, sodium laureth sulfate, and sugar — substances that can be used as essential chemicals or mixers in the production of fentanyl pills — to four Mexico-based companies. 

The indictment briefly mentions the methods the network used to receive money. Initially, payments for the chemical substances and synthetic drugs were made via regular bank transfers, but increased surveillance from the Chinese government over its financial institutions allegedly forced the Zheng clan to switch to cryptocurrencies, such as Bitcoin. 

In and of themselves, cryptocurrency transactions are not illegal, but some of what the Zheng DTO did could be illegal. For example, the indictment claimed it “misrepresented fund transfers and directed customers to misrepresent fund transfers”; it used “structured transactions,” so it would not trip the wires that require institutional and record-keeping safeguards; and it “bypassed Chinese restrictions and reporting requirements on fiat currency entering and leaving” China. 

Our research corroborated some of these patterns, especially those related to the use of cryptocurrency to pay Chinese vendors. Several independent, Mexico-based fentanyl and methamphetamine producers told InSight Crime that chemical vendors in China seemed to prefer cryptocurrency for small-level transactions; the second option was bank transfers. And in our interactions with chemical purveyors on the Clearnet and dark web regarding fentanyl precursors, we found they leaned towards cryptocurrencies, specifically Bitcoin. 

These methods were also evident in a recent series of indictments released in June 2023 by the US Justice Department. In one of the charging documents, prosecutors described a China-based chemical company receiving payments via “cryptocurrency” before sending fentanyl precursor chemicals to Mexico and the United States.  

The June 2023 indictment does not specify which cryptocurrency was used or how the transactions were made, but investigators and prosecutors contacted by InSight Crime said the use of cryptocurrency by criminal networks is evolving. While the Zheng network used Bitcoin and did little to hide these transactions, according to one investigator who worked on that case, more recently criminal networks have trended towards the use of Tether and may be employing applications such as “blenders” or “mixers,” which mix transactions to muddy the crypto trail. 

With a market cap of over $100 billion, Tether is one of the most-traded cryptocurrencies in the world and the most-traded “stablecoin” — i.e., pegged to the US dollar. It is appealing to traffickers for various reasons. In a report published in January, the United Nations noted that Tether had become “a preferred choice for crypto money launderers in East and Southeast Asia due to its stability and the ease, anonymity, and low fees of its transactions.” 

The cryptocurrency is traded in such large amounts, it may also be servicing industrial-sized customers. In April, Reuters reported that Venezuela’s state oil company, PDVSA, was using Tether to sidestep US sanctions. And one investigator, who monitors large-scale illegal drug transactions in the millions of dollars, told InSight Crime that he had noted trading of large amounts of Tether. 

The trading platform may also matter. The investigator cited above said the traffickers were using Tron, a decentralized blockchain-based operating system. It was founded in Singapore and has operational nodes across the globe, with its greatest concentration of nodes in China, according to Messari, a market-research firm. And the investigator said it is an attractive platform for criminal organizations because Tron is mostly based outside the United States and can help them avoid scrutiny by US investigators. 

Another investigator we contacted who had examined the synthetic drug supply chain emanating from China noted that, in addition to Tron, traffickers were using Ethereum, a different blockchain-based operating system. The investigator surmised that this was because the criminal networks would “pay less of a fee” to China-affiliated exchanges such as Binance for these transactions. 

At least one application on Ethereum has faced scrutiny. In August 2022, the US Treasury Department sanctioned Tornado Cash, a blender that was operating on the Ethereum platform. The blender, according to the Treasury Department, facilitated “anonymous transactions by obfuscating their origin, destination, and counterparties.” And in August 2023, the US Justice Department indicted Tornado Cash’s creator, claiming he had facilitated the laundering of up to $1 billion in criminal proceeds. 

This was the second major effort to crackdown on blenders. But the proverbial game of whack-a-mole is difficult, in part because of the decentralized nature of the crypto business. For its part, Tether responded to the UN report, saying it was “disappointed” in the agency’s assessment and that its monitoring systems far surpassed those of traditional banks. It also said it had frozen $300 million in recent months, and in May, the company announced a partnership with the blockchain analysis firm, Chainalysis, to develop a “customized solution” for tracking illicit money flows.

Right Hand Not Talking to the Left

There are many reasons that Mexico has no cases related to financing precursor chemicals or laundering synthetic drug proceeds. It begins with poor data. There are no good estimates, for example, as to the size and scope of money laundering in Mexico. As the UIF itself points out in its National Money Laundering and Terrorism Financing Assessment 2023, “The Mexican State does not have an established methodology or guidelines that allow it to accurately measure the volume of illicit resources generated in the country because producing a document of this nature could contain unreliable variables.”

The UIF does provide statistics regarding criminal complaints — 166 in 2023 — and individuals and entities whose accounts have been included in the “blocked list” — 6,969 individuals or entities and 45,342 frozen accounts, totaling $4.45 billion pesos (around $262 million) in blocked funds as of February 2024. However, it is not possible to know how many of the criminal complaints have resulted in a prosecution nor, per its own admission, what the importance of the frozen funds is relative to the total illegal proceeds that are laundered in Mexico. 

The government’s lack of transparency in these matters has been noted in public forums. The UIF’s opacity has spawned recurrent accusations of political bias, including in Mexico’s Congress. In the same vein, the Attorney General’s Office does not provide money laundering prosecution statistics and does not provide any context for the confiscation of proceeds from judiciary processes in which it is involved — other than asserting that the estimated total value in play for the most recent year it has statistics, 2022, was $1.5 billion pesos (or about $88 million), about a third of what the UIF has blocked. 

But the core of the problem appears to be a conflict between these two key agencies and a discrepancy about how and whether to prosecute money laundering cases at all. While money laundering can be prosecuted on its own, most money laundering cases come with what is known as a “predicate offense.” In other words, there is an underlying criminal act — drug trafficking, human trafficking, corruption, etc. — which leads to the need to launder illicit proceeds. 

In the case of Mexico, these prosecutions are subject to different investigative processes with widely differing objectives and institutional capabilities. While both Mexico’s Anti-Money Laundering Law (AML) and the federal penal code grant significant supervisory and investigative powers to the UIF, it is, in the end, an intelligence-gathering agency. The evidence it has is often raw and related to patterns of misbehavior, which it then passes to the Attorney General’s Office, the entity responsible for prosecuting the cases. 

SEE ALSO: Mexico’s Laws to Regulate Chemicals Work on Paper But Not in Practice

For their part, the Attorney General’s Office has numerous special departments that can continue these investigations. The prosecutors, however, need proof that can withstand judicial scrutiny, which often requires more investigative legwork they are either: not prepared to do; do not have the time to do because of workload and inadequate staff; are paid by corrupt actors not to do; or do not think it is necessary to do since most of their cases already include predicate offenses that can lead to significant prison sentences.  

The result is that few money laundering cases are even prosecuted, and none that we could find are connected to precursor chemicals or synthetic drug distribution and sales. In its 2018 report, the FATF noted solemnly that “financial intelligence does not often lead to launching ML (money laundering) investigations,” noting a significant difference in priorities between the UIF and prosecuting authorities. 

“In view of the serious threat posed by the main predicate offenses, the competent authorities accord far more priority to the investigation of the predicate offenses and scant attention is paid to ML,” the FATF wrote.

The disconnect often plays out in public. In 2020, for example, current Attorney General Alejandro Gertz told Aristegui Noticias that the failure of the Attorney General’s Office in prosecuting cases was that the UIF failed to “provide all the proof.” 

It was as if the attorney general thought the UIF was an adjunct prosecutorial unit.

Money Flows from Mexico

Another US investigation the UIF participated in was against the Zamudio Lerma network. In February 2023, the US Treasury Department sanctioned the network for its role as precursor suppliers of the Sinaloa Cartel. 

The Treasury Department named several Zamudio Lerma family members and associates, as well as a series of companies that provided them with the requisite infrastructure to launder both the precursor chemicals and the proceeds of these sales. This included an import/export company, a pharmacy, a hardware company, and a real estate company. In addition, a Treasury Department sanctions list released in July 2023 named another family member who had been the director of Culiacán’s General Hospital and sanctioned an import/export company called REI Companía Interacional, which, using Altana, we investigated. 

According to shipping records accessed via Altana, REI maintained relations with at least three Hong Kong and China-based chemical companies. One of these, Tai’an Herris Chemical Co., Ltd., sent 192 tons of n-methylformamide, a dual-use substance that is heavily regulated because of its use in the synthesis of methamphetamine. The records show that Tai’an Herris Chemical also sent 9.6 tons of methyl thioglycolate and 21.12 tons of isobutyronitrile to REI between April and October 2020. Another company, Shandong Tai’an Construction Engineering Group, sent at least nine shipments of a total of 128 tons of n-methylformamide, 40 tons of tartaric acid, and 19.2 tons of isobutyronitrile to REI between May and November 2020. All these substances can be used to produce methamphetamine.

Notwithstanding the participation of numerous law enforcement — the FBI, the DEA, and Mexican government agencies — as of publication, there were no known formal charges against any members of the network in the United States or Mexico. 

However, the shipments appear to illustrate an important pattern as it relates to methamphetamine precursors and payments for them: Methamphetamine producers import less regulated pre-precursors and essential chemical substances, and, in these cases, there is little need to obfuscate the chemicals or the payment methods. 

What’s more, payments for methamphetamine pre-precursors and essential chemicals can be hidden amidst large purchase orders that often include many other chemicals that do not have illicit uses.

In fact, using Altana, we found numerous companies in Mexico that follow a similar pattern. For example, one Monterrey-based company, which we do not name because it has not been sanctioned nor criminally charged, frequently deals with Chinese companies that sell controlled substances. And it reported importing 950 tons of methyl chloride in a dozen different shipments, as well as receiving a shipment of 26 tons of acetic acid. The first substance is an essential chemical for methamphetamine production and is not regulated in Mexico. The second is a pre-precursor for methamphetamine and fentanyl that is regulated in Mexico. Aside from these chemicals, the company imported hundreds of tons of other products, including cleaning products, industrial solvents, plastics, and soaps.

From what we can surmise, the payments for these chemicals were most likely done via bank transfers, reported to financial institutions, and did not raise any red flags given the wide swath of chemical transactions embedded in the purchase orders. In sum, when it comes to methamphetamine precursors, neither the shipments nor the payments are going to necessarily trip investigative wires. 

SEE ALSO: Beyond China: How Other Countries Provide Precursor Chemicals to Mexico

But when it comes to fentanyl precursors, we found a different pattern. According to Altana data, beginning in 2020, REI received a series of random shipments that did not seem to correspond at all to their regular business practices.

In one of these, Cameron Sino Technology Limited, sent at least 40 shipments of what it listed as “lithium batteries” and “lithium battery chargers” to REI between August 2020 and March 2023, with the help of a Mexico City-based broker. Other companies listed motorcycle locks, paintings, pet toys, and security locks on the manifests of their shipments to REI.

Government investigators told InSight Crime that these types of random shipments raised red flags because of the possibility that they were mislabeling the items for the shipping manifests and bills of lading. The changes often followed changes in regulations in China. And whereas the stated amounts and weights of the shipped goods remained the same, the names of what was being shipped changed. 

The pattern was particularly true as it relates to fentanyl precursors, and it is a common practice that authorities have identified in other cases, according to InSight Crime interviews with the Mexican navy and retired port officials, as well as per our clandestine interactions with chemical purveyors in China. 

This is, in part, because the amount of precursors needed is much less than what is needed to produce methamphetamine. Thus, disguising the movement of the chemicals in small shipments of random products becomes a simple process. 

Investigators also say the payments for fentanyl precursors are easily hidden amid a sea of random transactions. Aside from cryptocurrencies, as in the case of the Zheng network, the payments move via wire transfers and services like Western Union. 

In some cases, criminal networks may also be trading goods for precursors. For example, José Alfredo Ortega, the minister for Public Security in Michoacán, told InSight Crime in December 2022 that brokers and buyers in the state were exchanging iron extracted from illegal mines on the state’s coast for precursor chemicals. 

“We have identified that iron was sold irregularly to Chinese buyers and, in exchange, they brought in precursor chemicals,” Ortega said.

Two members of an armed group in the town of Aquila, which is located close to the mining region, corroborated this account.

Similarly, a 2022 Brookings Institution report concluded illegal trade in wildlife was being used by Mexican criminal groups as a means to buy precursor chemicals from China, and launder the money in the process. More recently, the Associated Press quoted a Mexican attorney who said that methamphetamine is exchanged in China for precursor chemicals.

Nonetheless, InSight Crime did not find any judicial cases in the United States or Mexico that document these types of payments. To be sure, the transactions, in particular for fentanyl precursors, are so small that they are difficult to track and may not be worth the effort. These micro-economic transactions are even more obscure in Mexico itself, where cash remains king.  

Cash: Still King in Mexico

On a recent hot, sunny morning in Culiacán, Sinaloa, we traveled downtown to an area near one of the city’s main markets. There we saw dozens of young adults sitting beneath umbrellas on the street, just outside the dark-tinted windows of currency exchange houses. In all, we counted 30 on one street alone. As cars passed, they yelled, “Dollars! Do you want some dollars?”

Curious, we approached one to inquire about an exchange. The attendant did not request any form of identification or ask us to sign any documents, as is legally required. Had we proceeded with the transaction, we could have exchanged large sums of cash without any record of it in the banking system. And when we checked the government’s registry to see who of these had an active license to change currency, none of them appeared. 

The street is a reflection of another reality that also makes money laundering and illicit financing difficult to fight in Mexico: the country’s reliance on cash. Cash dominates the financial landscape of Mexico, and its importance continues to grow, rather than decrease. According to Mexico’s Central Bank, as of February 2024, there were about 2.788 billion pesos (around $164 million) in bills and coins circulating in Mexico, a 9.9% increase from February 2023. 

The increase outpaced inflation and also illustrated the continued importance of remittances, which a recent Reuters report said was also becoming a mainstay of money laundering operations of the Sinaloa Cartel. Remittances hit a record $63.1 billion pesos in 2023 ($3.7 billion), a 7.6% increase compared to the previous year, and an 89.5% increase compared to 2018, according to data from Mexico’s Central Bank.

Furthermore, according to the 2021 Financial Inclusion National Survey, 90.1% of Mexicans used cash for purchases under $500 pesos (or $30) and 78.7% for purchases over that amount, with similar trends observed across all regions of the country. Likewise, about half of the population did not have any savings in a bank account or debit cards. 

The laws also favor cash and “analog” methods of payment that are not registered by the banking system. In Mexico, for example, it is possible to conduct large financial operations using cash or precious metals without running afoul of article 32 of the AML law. While there is a threshold for certain types of transactions, such as real estate, it is relatively high (see list below). What’s more, the list does not include transactions for chemicals, which, in effect, means there is no limit for the use of cash in making these purchases. 

Even if one were to assume that there is a high level of compliance and enforcement for article 32 of the country’s AML law — which is unlikely, given the low number of prosecutions — it is clear that the prevalence of the use of cash and the relatively high legal thresholds for cash transactions might significantly reduce the necessity of integrating the money back into the system. 

The implications of this cash flow in the precursor market are clear, especially when you consider the horizontal nature of the marketplace. There are, quite simply, numerous independent fentanyl and methamphetamine producers who import or buy chemicals on the local level. 

These are relatively small transactions when measured in dollars. For example, four fentanyl producers told InSight Crime the investment to set up a production operation was close to a million pesos, or $58,000. Smaller labs could be set up with as little as $11,600, according to another independent producer. 

Once a lab was running, the cost of buying the necessary chemical substances to produce one kilogram of fentanyl was also relatively low: The producers said it would run between $2,000 and $5,000, which could also be paid in cash in Mexico. The cost of 1-BOC-4-Piperidone, the preferred pre-precursor to manufacture fentanyl, for example, could vary between $1,000 to $4,000, according to our interviews with both local producers and our interactions with Chinese sellers — another transaction that could be satisfied via fiat once the chemicals were in Mexico.

The production of methamphetamine implies more costs, especially when setting up a lab, as the quantities are larger and more specialized equipment is required. According to methamphetamine producers interviewed in Michoacán, this can go as high as $157,000. The prices of the required pre-precursors and essential chemicals fluctuate constantly, according to our sources. But over the past year, the necessary substances to produce 120 kilograms of methamphetamine were worth between $23,000 and $35,000. As noted above, something close to these amounts could be paid via cash without tripping any investigative algorithms.

The small amounts that move via fiat also obviate the ability and desire of authorities to track and prosecute such crimes. Two former UIF officials who spoke to InSight Crime on condition of anonymity, said these transactions were simply too small.

“[These numbers] are not at all significant to raise any alarms in the financial system. It goes by unnoticed,” one of the officials said.

The UIF-Typology’s Real Life Twin

On August 27, 2019, Mexico’s Marines (SEMAR) seized over 23 tons of precursor chemicals in the Lázaro Cárdenas port of Michoacán, on the Pacific coast of Mexico. The chemicals arrived on a Dutch cargo ship at the request of Culiacán-based company, Distribuidora Agroindustrial Ocher. 

In its account of the case, Proceso said SEMAR alerted the UIF, which began an investigation in the case. What it turned up looked remarkably similar to the case study — or the “typology,” as they had called it — cited at the onset of this report. 

Like the case study, Ocher was a front company, which was connected to another Sinaloa-based company called Mi Pao, S.A. de C.V., which was also importing precursor chemicals. Both companies were receiving chemicals and machinery from a Hong Kong-based company, according to Altana.

And like the case study, the prime suspect had Asian ties. Proceso said the owner of Mi Pao was Tawainese national, Chiang Li Chun. As it was in the case study, Chun had been arrested in May. In Chun’s case, he was connected to a fentanyl laboratory where authorities found 40,000 counterfeit pills and 14 kilograms of powdered fentanyl. 

A person with knowledge of the investigation told InSight Crime that the UIF eventually froze Ocher’s account. But no other public information is available about any prosecution of those implicated in the case.  

*Jorge Lara, Jaime López-Aranda, Victoria Dittmar, and 穆小姐 contributed reporting to this article.  Fact-checked by Peter Appleby.

Altana supports InSight Crime’s research into precursor chemical flows by providing access to the Atlas, a dynamic, AI-Powered map of global supply chains, as well as to its Counternarcotics Dashboard, an AI-driven model to flag narcotics trafficking risk within global shipment and business ownership data.

The post How Mexico Loses the Precursor Chemical Money Trail appeared first on InSight Crime.

While the United States has often been the cautionary tale of a fentanyl crisis, Canada’s experience could offer a better model.

The international narrative around the fentanyl crisis has largely been based on the US experience. There is a good reason for this. Consumption of this synthetic opioid has caused hundreds of thousands of drug overdose deaths each year.

Authorities have noted the systematic overprescription of pharmaceutical opioids and the industrial spirit of Mexican drug trafficking networks among the underlying causes that led this illicit market to boom. And these dynamics have served as a benchmark for predicting whether fentanyl consumption could expand to other countries, especially because sophisticated criminal organizations and large pools of opioid users are present around the world.

Canada, however, developed its own crisis on the back of its local criminal dynamics and consumption patterns differing from those of the United States. It could therefore serve as a better example of challenges that may be faced in other regions, such as Europe, Oceania, and Latin America, which are slowly beginning to detect illicit fentanyl in their drug-consuming populations.

“The case of Canada can be seen as a canary in a coal mine,” said Jaime Arredondo, a researcher at the University of Victoria in British Columbia, who has studied substance use extensively.

In fact, Canada recognized it had a problem even earlier than the United States. The provincial government of British Columbia, on Canada’s west coast, declared it had a fentanyl crisis in April 2016, a year and a half before the US government declared the opioid epidemic a national public health emergency.

SEE ALSO: Is the Fentanyl Market Expanding Across Latin America?

Like in the US, fentanyl consumption was on the rise among opioid and injectable drug users, especially in the port city of Vancouver. The city had a long tradition of heroin consumption, established criminal networks, and a wide commercial exchange with China, where fentanyl was produced and shipped to North America. 

But that is where the similarities ended. Canada did not have a history of over-prescription of opioid-based painkillers, which is what had laid the groundwork for the US fentanyl crisis. Yet, over the next seven years, drug overdoses would continue to increase, provoking an unprecedented number of deaths and hospitalizations. 

What’s more, since 2019, drug consumption and drug overdose statistics suggest the fentanyl crisis has spread to eastern provinces and among users with no history of opioid use. This has overwhelmed health services and sparked questions as to why Canada became a hotbed of synthetic opioid use and whether its use patterns will be repeated in other, similar markets around the world.

Below, we offer three patterns that should worry authorities, no matter where they are.

1. Drug Use Bigger Problem Than Over-Prescriptions 

The origins of the fentanyl crisis in the United States have been traced back to the over-prescription of opioids to treat pain and chronic illnesses, which led to high levels of addiction. After authorities cracked down on the doctors and pharmacies prescribing opioids, many people sought alternatives on the black market, such as heroin or counterfeit pharmaceuticals.

Initially, fentanyl traffickers seemed to target these consumers. The most common method used to sell fentanyl then – and still today – was through fake oxycodone pills or counterfeit versions of other prescription opioids. Heroin was also laced with fentanyl.

In contrast, prescription opioid consumption in Canada was nowhere near as high as in the United States. Around 13% of Canadians were using prescription opioids in 2015, compared to almost 36% of the US population, according to government surveys in both countries. In 2013, doctors filed 3 million opioid prescriptions in British Columbia, which accounts for 650.2 prescriptions for every 1,000 people. The rate was 1,176 in West Virginia in 2014, the US state considered one of the epicenters of the US crisis.

The commercialization of fentanyl in Canada thus seemed to spread largely among users already seeking illicit drugs or sedatives. In Canada, for example, fentanyl has been found mainly mixed with heroin, benzodiazepines, and stimulant drugs, according to a 2023 study by Canadian health authorities. In the last four years, there has been a particular increase in fentanyl-laced methamphetamine.

“Drug users in Canada are now facing a contaminated drug supply,” said Arredondo, who has also conducted several drug testing studies.

What’s more, on the streets in Canada, dealers commonly sell fentanyl without trying to disguise it as prescription opioids  – a common practice in the United States. For example, a 2021 academic study found the drug was widely sold in a form known as “pebbles.” Fentanyl is also commonly sold directly in powder form, according to a Canadian government official who analyzes the opioid market and spoke to InSight Crime anonymously.

“People in Canada are increasingly understanding that what they’re getting is fentanyl. There’s no need to pretend it’s counterfeit pharmaceuticals,” the official told InSight Crime.

2. From Consumption to Production

The fight against fentanyl in the United States has been largely focused on disrupting sophisticated drug trafficking networks in Mexico and China. But Canada’s experience shows how the production of synthetic drugs, unlike plant-based drugs, has a far lower barrier of entry.

The majority of fentanyl consumed in the country continues to come directly from China, according to Canadian authorities. Since 2019, however, there is growing evidence to suggest that local production grew when China imposed stricter controls on fentanyl, just as it did in Mexico.

Drug seizure data tells part of the story. Between 2018 and early 2024, the Canada Border Services Agency registered a slight decline in fentanyl seizures at entry points. At the same time, authorities seized an increasing amount of chemicals at the country’s borders that could potentially be used for synthetic drug production. And in the last two years, Canadian authorities have found clandestine fentanyl laboratories in the provinces of British Columbia, Alberta, and Ontario. Some of these have been characterized as “Super Labs” with the capacity to produce large quantities of the drug.

This shift comes amid the increasingly widespread local production of several synthetic drugs. Since at least 2020, data collected by the Royal Canadian Mounted Police (RCMP) shows that the majority of methamphetamine and ecstasy consumed in Canada is produced locally in clandestine laboratories.

There is also some evidence that Canadian networks have begun to export fentanyl. In 2022, Australian police seized an 11 kilogram shipment of fentanyl powder that departed from an unspecified Canadian port. US law enforcement has also filed several indictments against Canadian citizens for sending small quantities of fentanyl to the United States using the postal service.

3. Constant Innovation

Canada’s experience also highlights the constant evolution of international synthetic drug markets and innovations made by criminal networks seeking to evade international regulations and market stronger substances that could pose a future threat. 

Part of this evolution has been driven by the chemical market in China. An InSight Crime investigation on the dark web and clearnet found that clandestine producers in the country constantly seek to send new and more potent substances to their clients abroad. The chemical composition of these products is often similar to controlled substances, but different enough to evade regulations.

SEE ALSO: The Synthetic Silk Road: Tracing China’s Grey-Market Precursor Chemical Trade

During a search for fentanyl precursor chemicals on the dark web and clearnet, InSight Crime found that several sellers were aggressively promoting ethazene, a synthetic opioid that is currently controlled in the United States but not in Canada or Mexico.

The attractiveness of this substance, according to the sellers, was that it had greater potency than fentanyl and was less regulated around the world.

The potential impact of these novel opioids on the streets may not be far off. Since 2019, both Canadian and US authorities have flagged an increase in the presence of nitazene, a specific class of opioids that is less potent than ethazene but more potent than fentanyl. So far, overdose deaths have been limited, but authorities fear they could increase as their commercialization becomes more widespread.

“It’s worrying that stronger substances are coming in, and we don’t know what the effects are going to be,” a RCMP analyst who did not have authorization to speak on-the-record told InSight Crime. .

Canadian civil society organizations also issued an alert in July 2022 about the presence of xylazine, or what is popularly termed “tranq,” a non-opioid sedative used legally in veterinary medicine that is mixed with fentanyl to prolong the effect. The US Drug Enforcement Administration (DEA) issued a similar alert a month later. By March 2024, civil society organizations in Mexico reported detecting the substance in the border cities of Mexicali and Tijuana, Baja California.

“[These new substances] are an innovation from fentanyl. It’s a way for the [illicit] market to respond to increased demand for longer and stronger effects,” the Canadian government official said.

*穆小姐 contributed reporting to this article.

The post 3 Reasons Why Canada is a Cautionary Tale for the International Fentanyl Market appeared first on InSight Crime.

A spate of arrests targeting politicians with gang links in the Brazilian state of São Paulo illustrates the ongoing evolution of the country’s largest criminal network. 

In a series of raids on April 16, Brazilian authorities captured three city councilors – Ricardo Queixão of Cubatão, Flávio Batista de Souza of Vasconcelos, and Luiz Carlos Alves Dias of Santa Isabel –  in addition to 10 others on suspicion of defrauding bids for municipal contracts in favor of the First Capital Command (Primeiro Comando da Capital – PCC), Brazil’s largest gang.   

Two more suspects remained at large. Brazilian newspaper Folha de São Paulo reported that the detainees included officials in the state governor’s office. 

The operation, led by the Special Action Group for Combating Organized Crime (Grupo de Atuação Especial de Combate ao Crime Organizado – GAECO), a special unit of the São Paulo State Public Prosecutor’s Office (Ministério Público – MP-SP), aimed to capture suspects and evidence related to supposed bid-rigging in favor of companies connected to the PCC.

SEE ALSO: Despite Rumors of a Split, PCC Remains United

The bids were related to contracts for companies providing cleaning services, inspection, and control posts, according to a statement by the MP-SP. The investigators drew from wiretaps, which eventually connected the criminal network to city councilors and other public officials “who directed bids through the control of companies,” GAECO Colonel Emerson Massera said in a press conference.

The bidders, according to government prosecutors, were either front companies or real businesses controlled by the same people. They garnered as much as 200 million reais ($38 million) in government business over the last five years, authorities said. 

In the raids, authorities also seized weapons, ammunition, cellular phones, 3.5 million reais ($660,000) in checks, and some smaller denominations of cash. 

“Our main objective at the moment is financial suffocation to weaken crime,” GAECO’s Flavia Flores said at the press conference.

InSight Crime Analysis

The PCC’s incursions into the world of municipal contracts suggest the group is continuing its natural evolution. The gang – which began over 30 years ago following a brutal prison riot – has steadily expanded its economic portfolio from collecting “dues” from prisoners and their families to raking in profits from facilitating international drug trafficking. 

The PCC still bases its operations in the country’s prisons. But with its economic power growing, it seemed only a matter of time before the group began working with local politicians and officials – a common pattern for criminal gangs operating in the Americas. 

But the PCC’s foray into municipal services and state contracts is anathema to the group’s core ideology and tradition. The PCC has an expression: o crime fortace o crime – crime strengthens crime. The saying references, among other things, how Brazil’s prison-based groups have created a kind of parallel society in which the country’s vastly unequal classes rarely cross paths and do business. 

This separation held for some time. There were corrupt politicians operating high-level schemes – typified by the Lava Jato scandal – and the low-level prison-based criminal organizations like the PCC and their counterparts in Rio de Janeiro, the infamous Red Command (Comando Vermelho – CV). 

But with increased economic prowess came the need to launder money, and with money laundering came the need for what Brazilians like to refer to as “factions” to interact with the elites. 

“The factions need this structure to expand their operations and strengthen their illicit activities,” GAECO’s Flores said in the press conference.

SEE ALSO: In Brazil, Old Police Tactics Lead to Same Results 

But while the CV remains relegated to the low echelons of crime, the PCC has moved up a notch, according to Benjamin Lessing, a professor of Political Science at the University of Chicago and an expert in Brazil’s prison gangs.

“The CV is way too wild, violent, porra louca [totally crazy] to get involved in these things,” he said in an email exchange. “But maybe the PCC is having better luck. In part because of its different structure and business model.” 

Lessing said the PCC has a more sophisticated approach, such as the ability to set up front companies. He also posited that it might be easier to break into the corruption market in São Paulo than in Rio de Janeiro.  

Bruno Paes Manso, who has written extensively on the PCC, told InSight Crime that the group first invested in local bus companies. These investments continue, as was evident in mid-April, when the MP-SP brought money-laundering charges against the founders of two bus companies that had been servicing as many as 700,000 riders per day at a cost of millions of reais to the government. The companies, the MP-SP claims, were formed by the PCC, which was using them to launder money from their bank robberies and drug trafficking schemes, among others.

But Paes Manso says the group has also created public service-companies related to landfills, waste management, and even has some that offer health and education services.

“The PCC follows the path of the mafia,” he said, “and has a tremendous capacity to penetrate public institutions.”

*Featured image: Police arrested 13 individuals linked to the PCC in a raid in São Paulo. Credit: Divulgação/MPSP

The post Brazil’s PCC Wades into Municipal Contracts Game appeared first on InSight Crime.

Coca prices have collapsed in parts of Colombia amid record hectares of cultivation. Could oversupply do what years of eradication have failed to achieve, prompting coca farmers to switch to legal crops?

This is wishful thinking, as world cocaine prices remain stable even as new markets in Asia are developed by traffickers, with European mafias assuming a growing role in the global trade. 2024 will be the year when the cocaine supply chain catches up with record levels of coca cultivation.

The reasons behind the decline in coca prices in parts of Colombia obey three different dynamics: conflict in areas of cultivation, which creates uncertainty and keeps buyers away; the saturation of drug smuggling routes out of Colombia amid high seizures; and the extraordinarily rapid growth in coca cultivation, with which supply chains have struggled to keep pace. But we believe that during 2024 this gap will be closed, and global organized crime, especially in Colombia and Peru, will enjoy bloated profits.

“There is not much evidence that this is a problem of oversupply, but rather a problem of confidence because the rules of the game are not well-defined,” Candice Welsch, the Andean and Southern Cone representative of the United Nations Office on Drugs and Crime (UNODC), told InSight Crime. “There are no hegemonic market controls, which generates uncertainty among producers who do not want to risk reprisals for selling their products to the wrong groups.”

A new round of fighting for Colombia’s cocaine trade was detonated after a 2016 peace agreement led to the demobilization of the country’s biggest rebel group, the Revolutionary Armed Forces of Colombia (Fuerzas Armada Revolucionarias de Colombia – FARC). The FARC had controlled over half of Colombia’s coca crops and the production of coca base, which is later crystallized into cocaine. They also provided a one-stop shop for traffickers, not only securing access to the raw material, but protecting drug laboratories, internal movement corridors, and departure points.

Now traffickers have to deal with multiple warring factions in areas the FARC once dominated: the eastern plains, the southern jungles, and much of the Pacific coastline.

Today, multiple criminal actors are slugging it out for control, including FARC dissident groups, the National Liberation Army (Ejército de Liberación Nacional – ELN), and the Gaitanista Self Defense Forces (Autodefensas Gaitanistas de Colombia – AGC), who can trace their roots back to the Medellín Cartel of Pablo Escobar. This contest is playing out at exactly the same time as the government of President Gustavo Petro is trying to negotiate an end to the country’s six-decade old civil conflict.

So long as a kilogram of cocaine in Colombia sells for $2,000 and fetches up to $25,000 in the United States, $35,000 in Europe, $50,000 in Asia, and up to $100,000 in Australia, the drug trade is going to remain vibrant and adapt to changes in supply, transport, and demand conditions. And it will adapt fast.

Potential cocaine production in Colombia alone has increased since 2018 by 600 tons. UNODC figures had possible cocaine production at 1,120 tons in 2018, and at 1,738 tons in 2022. This increase over just five years is worth $1.2 billion at source prices in Colombia, and at least $20 billion on international wholesale markets. This is a huge potential windfall for transnational organized crime and already Mexican and European traffickers are queuing up to get their share of the Colombian cocaine bonanza.

With the growing volume of cocaine shipments, seizures are up. The Petro administration says it seized 697 tons of cocaine in 2023, a 13% increase from the previous year.

Yet the seizure rate is barely keeping up with the increase in production, while the government policy to reduce eradication of drug crops means that potential cocaine production is still rising, even if, as the UNODC suggested to InSight Crime, coca cultivation is leveling off.

“Even if they are currently not harvesting the coca in some part of the country, the coca bushes continue to grow,” said Sergio Uribe, a drug expert who has worked with the US Embassy in Bogota as well as the European Union. “As soon as the market is ready, the coca will be harvested. There is currently cocaine stacked up in the supply chain, waiting for export. This is a non-perishable product that has a shelf life, if vacuum-packed, of at least five years.”

The US market for cocaine has remained relatively stable for years. The European market is still growing. Of the 10 largest seizures of cocaine in European history, five were recorded during 2023, according to an InSight Crime database. The largest single seizure this year in Europe was 10 tons discovered in the port of Hamburg in July, worth an estimated $3.5 billion at wholesale prices. European criminals are increasingly being arrested upstream in Latin America as they negotiate to secure cocaine at its source and seek to maximize their earnings per kilogram by arranging their own transport. The InSight Crime database also revealed that 38 senior European drug traffickers have been arrested across Latin America and the Caribbean since 2019, more than the previous 10 years combined, with Italians leading the tally, followed by the Dutch, and then traffickers from the Balkans.

Drug trafficking sources in Medellín, InSight Crime’s home base, have talked about concerted efforts to develop cocaine markets in Asia. Here there are strong middle classes with significant incomes, virgin markets ripe for exploitation. The traffickers consulted expressed no worries of international prices falling. They were focused on diversifying markets beyond the traditional destinations of the United States and Western Europe.

The UNODC also believes that the interruption to the cocaine production chain in Colombia will likely be temporary.

“The situation appears to be very temporary in the production enclaves and it is expected that once control of the business is defined, the production rhythm will resume,” Welsch said.

Control of the business will be achieved when one of the warring factions gains hegemonic control over certain coca-growing areas. Ideology now plays little part in the Colombian civil conflict, and different factions have already shown a willingness to work with foes in the interests of maximizing earnings from the drug trade. While conflict between different factions will continue in certain parts of Colombia during 2024, in others it seems likely that new front lines and cooperation agreements will be negotiated, allowing the cocaine business to flourish once again.

While coca cultivation has grown exponentially in Colombia, Peru and Bolivia have also seen increases. What is worrying in these two nations is how political chaos is pushing counternarcotics strategies further and further down the list of government priorities. In Peru, President Pedro Castillo was removed from office and imprisoned in December 2022, while his deputy and successor, Dina Boluarte, has faced widespread civil unrest. In Bolivia, a civil war within the ruling Movement to Socialism Party (Movimiento al Socialismo – MAS), between current President Luis Arce and former President Evo Morales, has hijacked the political agenda. Bolivia is preparing for general elections for the presidency and Congress in 2025. In Colombia, Petro has seen his approval ratings drop to the lowest point of his tenure. All of this means that there will be diminishing resistance to cocaine trafficking during 2024 in the main production nations, while transnational organized crime sorts out its supply chain issues.

A worrying development has been the establishment of industrial plantations of coca outside of the three traditional growers of Colombia, Peru, and Bolivia. Venezuela, Guatemala, and Honduras have now replicated the cocaine production system established in Colombia, with coca fields alongside laboratories and airstrips or close to other departure points. While still in its infancy in these nations, Colombia has shown that despite billions in US aid aimed at reducing production, once coca takes root it is very difficult to eradicate.

SEE ALSO: The Moskitia: The Honduran Jungle Drowning in Cocaine

“Coca can now easily be grown outside of the Andes,” said Uribe, who is also an expert in coca cultivation. “Traffickers have now crossbred different strains that can grow under different conditions, with a much higher alkaloid content for more cocaine per hectare. Central America is now an ideal place to grow coca.”

The damage of the cocaine trade is not restricted to the producer nations. As interdiction in Colombia improves, traffickers need to find new ways of getting the drugs to market. And with there being no land bridge to Europe, maritime trafficking is the norm, meaning that ports with international container shipping are particularly sought after by transnational organized crime.

“We are seeing increasing volumes of cocaine moving by land into neighboring countries,” said a police analyst who was not authorized to speak on the record. “There is little resistance for drug shipments crossing into Venezuela for example, and so more cocaine seems to be moving towards departure points in the Caribbean.”

Perhaps the most sobering story of the dangers for any transit nation has been that of Ecuador during 2023. With the port of Guayaquil one of the principal contamination points for cocaine shipments heading to Europe, the country has seen its murder rate quadruple over the last five years and seen native organized crime, allied with Colombians, Mexicans, and Europeans drug trafficking organizations, undergo unprecedented growth. So much so that criminals did not hesitate, in August 2023, to assassinate a presidential candidate, Fernando Villavicencio, who was campaigning on a tough security platform.

Cocaine has long been the foundation of transnational organized crime in Latin America and the Caribbean. While synthetic drug production, illegal gold mining, human smuggling, and human trafficking, as well as environmental crime, earned billions for criminal syndicates in 2023, cocaine remains the principal driver of criminal evolution and earnings.

So, when those cocaine earnings can increase by billions of dollars, the threats to Latin America and the Caribbean are potentially very grave.

How many new cartel members can be recruited with increased cocaine earnings? How many officials can be corrupted, how many communities can be won over, how much more state penetration and criminal governance will we see in a region where democracy is already under siege? And how much more violence will be generated as different criminal groups, with state embedded allies, fight for control of the trade? Latin America and the Caribbean is already the most violent region in the world, with just 8% of the world’s population and some 30% of its murders.

Latin America faces a new challenge in an established criminal economy during 2024. While Europe has awoken to the threats the cocaine trade presents to the Old World, dedicating more resources and home and upstream, to fight the drug flow, the United States, long the dominant regional player in the fight against cocaine, has lost focus.

Fentanyl and migration dominate the political agenda in Washington, even as the country readies for presidential elections, while US influence in Latin America wanes, especially in the two nations key to fighting the cocaine scourge: Colombia and Mexico.

While transnational organized crime will focus during 2024 on the cocaine bonanza, politicians across the region are going to be distracted.

The post GameChangers 2023: The Cocaine Flash-to-Bang in 2024 appeared first on InSight Crime.

Welcome to InSight Crime’s GameChangers 2023, where we highlight the most important trends in organized crime in the Americas over the year.

The year 2023 was like staring through the looking glass, with Latin America and the Caribbean becoming even more surreal than usual. Nations thought to be safe suddenly found themselves worrying about crime sprees, while a country wracked by violence elected a candidate promising more community policing. The president of the sole, illicit fentanyl-producing country in the region denied it had any role in that production. And the US reestablished ties with two still-defiant pariah states.

Meanwhile, a mafia-style government apparently cracked down on its most notorious prison gang. The most popular crime-fighting president in the Americas sprang a top gang leader from jail. The region’s bloodiest prison riot in years was in a female-only facility. And a former guerrilla-turned president reaped what he’d once sowed, as he tried to forge “Total Peace” among warring criminal and insurgent factions looking to benefit from a cocaine bonanza.

Searching for the Next Ecuador

Of all these countries, Ecuador’s downward criminal spiral stands out. What was once a relatively tranquil place has become a cauldron of violence and criminality, capped by the assassination of a presidential candidate, Fernando Villavicencio. The violence, which begun in the prisons, has spread across the country, especially to the trafficking corridors and dispatch points for cocaine consignments.

In spite of these trends, Ecuador’s front-runners for president spent most of the campaign season this year highlighting social and economic solutions. While this changed somewhat after Villavicencio’s assassination, Ecuador’s new president, Daniel Noboa, seems to understand that he cannot face crime with repression alone and has proposed things like more community policing.

SEE ALSO: From Rhetoric to Reality on Ecuador’s Security Challenge

“Poverty, inequality, lack of opportunity, and underemployment generate frustration and despair, often driving people to crime. Therefore, any effort to reduce violence must include an inclusive socioeconomic development strategy,” read Noboa’s official presidential platform. 

But the stark reality he faces once in office may trump any plans he had on the campaign trail. Surging cocaine production in neighboring Colombia has fed the rise in violence, and Ecuador’s ill-prepared security forces and prisons have allowed crime to take root.

The rapid decline of Ecuador’s security situation has other countries worried they might be next. Among them is Chile. While its homicide rate remains low compared to most of the rest of the region, a spike in crime and violence in the northern part of the country, as well as attacks against the country’s vaunted Carabineros police force, has Chileans concerned.

Polls show Chileans, more than any other country in the region, are concerned about the rise in crime. Much blame is heaped on foreign-based groups, and while the Venezuela-based Tren de Aragua has a significant presence in Chile and elsewhere, the responsibility for Chile’s tumble is not the result of the presence of one criminal organization.  

Another relatively crime-free nation that scrambled in 2023 was Costa Rica. Once an oasis amid a sea of violence and civil wars, the Central American country now finds itself in unfamiliar territory as a crime and violence hotspot. In 2023, for the second straight year, it broke its own homicide record. Like its counterpart, Ecuador, much of the surge in crime is reportedly connected to rising cocaine and marijuana trafficking, as criminals shift from traditional hubs such as the port in Limón to newer trafficking corridors.

Another country to make organized crime news in 2023 was Uruguay, long one of the region’s most stable and peaceful democracies. Uruguay’s problems do not yet warrant the red flags flying in Ecuador, Chile, and Costa Rica, but it has something they do not: a prominent international criminal player. His name is Sebastian Marset, who in July nimbly escaped a 2,500-member strike force assembled against him in neighboring Bolivia. With connections in Europe, the Middle East, and throughout South America, Marset is the consummate modern-day trafficker — a broker who has more of an international network than a physical base, and employs a flare for business more than a private army. 

America’s Synthetic Drugs Find New Markets

These international networks are drawing global players from elsewhere to the region. There are Nigerians in Brazil and Albanians in Ecuador. The globalization of the world economy, back on track after the interruption of COVID-19, means growing multinational coalitions with increasingly diverse criminal portfolios. These offerings include synthetic drugs, whose rise in use in the United States may not soon be replicated in the rest of the Western Hemisphere, but whose modus operandi may change the illicit drug landscape forever.

Latin America’s synthetic drug production, once focused solely on the United States, is starting to reach Europe and penetrate domestic consumption markets. Producers rely on precursors coming from the legal global chemical industry, and the only way to stop it is to better regulate that industry. However, few governments have the means or the political will to do so, lest they risk slowing the flow of chemicals used for legal purposes.

The country with the most acute challenge in this regard is Mexico. Although Mexican President Andrés Manuel López Obrador continued to deny that criminal groups in his nation produce illicit fentanyl, InSight Crime showed in a 2023 report exactly how prolific a production hub the country is for the drug.

SEE ALSO: How Fentanyl Is Synthesized in Mexico

Much of this fentanyl is fueling an epidemic of overdose deaths in the United States and roiling relations with Washington. US political rhetoric vilifying Mexico and threatening military action inside its territory is not helping, nor does the US obsession with the theory that two “cartels” have created a kind of farm-to-table distribution system that is “poisoning” suburbanite kids.

The reality, as we documented, is something much more sinister: a dispersed, decentralized criminal network that is much harder to dismantle, even if — as the Mexico and the United States did — you capture and extradite one of the world’s top suspected fentanyl traffickers. And even if — as elements of the Sinaloa Cartel did — you put a ban on the illicit production of fentanyl. The steep drops in wholesale and retail prices of fentanyl evident in 2023 further illustrate the challenge ahead.

What’s left is a sobering example of the power and resilience of these new synthetic drug markets, the most popular of which is not fentanyl but methamphetamine. Methamphetamine produced in the Americas is spreading to places as far away as Australia and beginning to impact places like Mexico, where use is spiking and its production is polluting the environment.

Diplomatic U-turns

While tensions over counternarcotics policy with Mexico persist, the US diplomatic stalemate with two other countries were broken in 2023. In October, Venezuela released five political prisoners and agreed to some reforms to open political space for opposition candidates. The United States, in return, lifted some sanctions. The agreement followed years of saber-rattling, extraditions, dramatic drug trafficking trials, and prisoner swaps. Yet, this détente seems likely to be temporary, as Venezuela refuses to give opposition politicians a run at next year’s presidential elections and threatens to annex half of neighboring Guyana.

The Venezuelan government began a historic crackdown on the country’s most notorious prison, Tocorón, the Tren de Aragua’s center of operations. The Tren de Aragua remains a powerful criminal group, but the raid may have upset the balance of power in Venezuela and beyond, given the Tren de Aragua’s regional presence. But nothing is as it seems in Venezuela, and prison leaders or “pranes” were able to escape security force operations, which smacked more of political theater. As InSight Crime wrote in a July investigation, Venezuela’s government relies on criminals to help it secure much needed access to criminal rents and maintain a lid on political opposition.  

The United States also had an about-face regarding El Salvador’s President Nayib Bukele. El Salvador’s Legislative Assembly, at Bukele’s behest, famously began a state of emergency in March 2022, which has led to the arrest of as many as 77,000 people, mainly young men, according to a police intelligence report InSight Crime obtained. The crackdown worked. The gangs are largely neutralized, both inside and outside of the prison walls where they have flourished, and polls show Bukele is the most popular president in the Americas. He is also positioned to sail through the 2024 elections, even though the country’s constitution prohibits second terms.

But the crackdown was also controversial, as it came amid the suspension of due process and other basic civil and human rights, which led to the arrest of thousands of innocent civilians. Bukele received private and public rebukes by the US government, including one young woman whose case we chronicled. (She was released shortly after our article was published.) In October, the US attitude seemed to shift, at least publicly, when the State Department’s Assistant Secretary of Western Hemisphere Affairs, Brian Nichols, had an “excellent” visit with the president.

However, not everyone in the US government is on board with the change in attitude, especially after the November arrest of one of the country’s foremost leaders of the Mara Salvatrucha (MS13) — Élmer Canales Rivera, alias “Crook” — in Mexico and subsequent deportation to the US to face terrorism charges. According to Salvadoran government records, Crook should have been in a Salvadoran jail. However — as the US Justice Department noted in subsequent public court filings — not long after the US requested his extradition, the Bukele government had secretly released Crook, given him a weapon, and housed him in a luxury apartment for a few days before arranging for a human smuggler to shuttle him across the El Salvador-Guatemalan border.

In the end, it was yet another paradox. And during 2024, reconciling the postures of the US State Department and the US Justice Department may be as hard as reconciling why Bukele’s government released Crook just before it launched its historic crackdown on the gangs.

Governments Caught Off-Guard

Honduras hit the headlines in 2023. In June, following years of clear warning signs and explicit pleas, members of the 18^th Street gang attacked the wing holding their rivals of the MS13. The result was 46 dead — many of them hacked to death with machetes — in the region’s bloodiest female-prison massacre on record.

InSight Crime had spent the previous few months visiting the prison, chronicling the lives of the incarcerated, the modus operandi of its criminal groups, and the growing tensions between them. Among the most alarming findings was how authorities’ stereotypical perceptions of female inmates as much less aggressive had blinded them to the possibility that anything of this nature could ever happen. They ignored repeated warnings and a crucial data point: That a smaller version of this same event had already happened three years prior.

Honduran authorities were not the only ones wearing blinders in 2023. Colombia’s President Gustavo Petro barreled through the year making hasty ceasefire agreements with multiple criminal and insurgent groups under his ambitious “Total Peace” plan, then scrambling to patch them up as soon as they sprung the predictable leaks.

Perhaps the most egregious example of this pattern came with the National Liberation Army (Ejército Nacional de Liberación – ELN), the country’s last remaining guerrilla army and one of its foremost criminal operators. Although the ELN is notorious for kidnapping, the ceasefire did not require it to stop this crime. Chaos followed, and as negotiations stalled on multiple fronts, the process appeared to be unraveling.

Petro’s naïveté is surprising, not least because he is a former guerrilla. But then again, it was hard to blame him. What used to be up was now down. What used to be cold was now hot. 2023 was the year we were all staring through the looking glass.

The post GameChangers 2023: Through the Looking Glass appeared first on InSight Crime.

El Salvador’s success in fighting gangs with a state of emergency inspired Honduras to do its own version. But one year on, two new reports suggest the country is seeing little results. 

Although Honduras President Xiomara Castro enacted a nationwide state of emergency that suspended constitutional rights and multiplied security forces’ efforts to crack down on the Mara Salvatrucha (MS13) and Barrio 18 gangs, a December 5 report by the Armed Conflict Location and Event Data Project (ACLED) found that the country’s state of emergency had “yielded mixed results” and that violence against civilians has “continued unabated” in 2023.

SEE ALSO: El Salvador’s (Perpetual) State of Emergency: How Bukele’s Government Overpowered Gangs

What’s more, the crackdown may have had unintended consequences. Specifically, ACLED said violence had spread beyond the traditional hotspots of Tegucigalpa and San Pedro Sula, possibly due to “increased pressure on gangs in the most populous urban areas due to frequent law enforcement operations.” 

Other crimes, such as extortion, have also spread, according to a forthcoming report on the state of exception by the Association for a More Just Society (Asociación para una Sociedad más Justa – ASJ).

“Extortion has gone up this year, rather than down,” Andreas Daugaard, the author of the report, told InSight Crime. While 9% of the population was affected by extortion during 2022, he said that number has risen to 11% this year. 

This follows InSight Crime’s findings that six months after the beginning of the state of emergency, at least two new extortion gangs had appeared.

Extortion also appears to be spreading to new areas, according to ASJ’s research. While the highest rate of extortion remains in the country’s second-largest city, San Pedro Sula, the second-highest incidence is now in La Paz, the rural department that borders El Salvador.

“We see that extortion is a national crime,” said Daugaard.

In contrast, El Salvador, which is now nearly two years into a ruthless anti-gang crackdown, has suppressed gang activity almost entirely, a recent InSight Crime investigation found. 

Homicides have fallen dramatically, and extortion, particularly in the transport sector, has plummeted. These gains, however, have come at a cost: the government has arrested over 1% of the population, suspended constitutional rights to due process, and is facing widespread allegations of torture and human rights violations inside the country’s prisons and beyond.

InSight Crime Analysis

The failings of Honduras’ year-long state of emergency are rooted in poor institutional development, geography, and politics. 

No institution is as important as Honduras’ police force, which is chronically unstable and corrupt.  

In 2011, the country began a series of police purges following a sharp increase in murders caused in large part by increased drug trafficking and gang activity. Several police officers, including San Pedro Sula’s top cop, have been accused of acting as hitmen for criminal groups, with members of the force also linked to the murder of the country’s anti-drug czar.

SEE ALSO: Honduras Anti-Gang Crackdown Targets Only One Source of Violence 

These purges devastated the police force between 2016 and 2019, with almost 6,000 of the country’s 13,500 police officers removed, according to La Prensa.

Though the purges had some success in ridding the force of corruption, steps needed to rebuild a strong and resilient force were never taken, ultimately undermining the potential effectiveness of the state of exception, according to Eric Olson, director of policy and strategic initiatives for the Seattle International Foundation.

“It is not the case that an effective purge results in long-term professionalism,” he told InSight Crime. “It has to be accompanied by strong internal affairs functions, strong external accountability functions, greater transparency, better-trained police forces, adequate resources, and a whole host of other elements. A police purge is an important element, but only one.”

The lack of resources available to the police has also hindered efforts under the state of exception. A 2020 report from the Washington Office on Latin America (WOLA) found that between 2014 and 2017, the Honduran police’s human resources fell “well below the minimum required to provide at least basic territorial coverage.”

 In 2019, Honduras had 173.3 police officers per 100,000, according to the Organization of American States (OAS). This is far below the 300 police per 100,000 suggested by the United Nations Office on Drugs and Crime (UNODC), and in stark contrast to El Salvador, which had 434.9 officers per 100,000.

Despite this, today the number of new Honduran police officers being trained is falling, according to Daugaard.

With an insufficient number of officers, the impact police could make against gangs in every reach of the country was limited. The country is mountainous, difficult to patrol, and large — one Honduran department, Olancho, covers a greater territory than all of El Salvador. 

Lastly, Honduras’ political commitment to the strategy looks questionable. While the extortion problem was set as a primary reason behind the state of emergency’s implementation — Castro announced “a war on extortion” just days before it began — little progress has been made.

From January to November 20, 2023, there have been just 19 people sentenced for extortion nationwide, the ASJ report found, citing figures from Honduras’ Attorney General’s Office.

“While in El Salvador the state of emergency has been an effective strategy, for better or for worse, in Honduras it is less of an actual strategy and more of a publicity stunt that is supposed to make the police appear as effective as in El Salvador,” Daugaard told InSight Crime.

“But the results are not comparable,” he added.

The post Honduras and El Salvador: Two States of Emergency With Very Different Results appeared first on InSight Crime.

Mexican authorities have captured a top Salvadoran gang leader who had been secretly released from an El Salvador prison and had fled the country. His capture, and expulsion to the United States to face charges, exposes the growing rift between the US and El Salvador over how to deal with top-level gang members. 

A US official, speaking on condition of anonymity, said that Mexican authorities had captured Élmer Canales Rivera, alias “Crook,” in Tapachula, a city along the Mexico-Guatemala border that is a crucial passage point and refuge for migrants. La Prensa Gráfica also reported the capture on November 9, citing an anonymous source. However, it did not say where he was captured. 

Crook is a member of the so-called ranfla histórica, the “historic leadership board” of the Mara Salvatrucha (MS13). The ranfla originally had 12 members. It referred to itself as the “Twelve Apostles of the Devil” before changing its moniker. The Devil is a reference to Borromeo Enrique Henriquez, alias the “Diablito de Hollywood,” the MS13’s top leader.

SEE ALSO: Political Connections in El Salvador Help MS13 Leaders Escape Abroad

Crook, who was considered by many to be the second highest-ranking member of the MS13 and is wanted for crimes in both El Salvador and the United States, is “already in United States’ hands,” La Prensa Gráfica reported. The US official told InSight Crime Crook was “en route” and would arrive on the evening of November 9. 

In the United States, Crook would face terrorism charges, the product of a 2020 indictment that charged 14 members of the MS13, including the 12 from the original Ranfla Histórica, with 1) conspiracy to provide material support and resources to terrorists; 2) conspiracy to commit acts of terrorism; 3) conspiracy to finance terrorism; 4) narco-terrorism. 

If he is sent to the United States, Crook would be the first one named on the indictment to face the charges on US soil. At least two others are at large. The rest are reportedly in the Salvadoran penitentiary system and are awaiting extradition. 

However, for reasons that are not clear, the El Salvador government has refused to extradite them, and Crook himself was released from prison under mysterious circumstances. 

What’s more, in a sign of the frosty relations between the two countries, the US government did not immediately communicate the capture to Salvadoran authorities, the US source said.  

InSight Crime Analysis

Crook’s capture brings to the fore a complex diplomatic and judicial fight between the United States and El Salvador. At the heart of this issue is how to deal with high-level members of the MS13 who may be getting special treatment from the El Salvador government. 

Crook, for example, was released from prison in November 2021, despite being convicted of two further crimes after he’d been incarcerated, which could have extended his sentence by as much as 40 years.

Crook’s release followed months of backroom negotiations between the MS13 leadership and the El Salvador government, during which the Nayib Bukele administration provided what the US Treasury Department described as “financial incentives” to gang leaders in return for lower homicides. The gangs, according to the Treasury Department, also agreed to “provide political support” to Bukele’s Nuevas Ideas party during the midterm elections, which the party swept to gain a supermajority in the country’s Legislative Assembly. 

Bukele subsequently used this supermajority to declare a state of emergency, which, amidst the suspension of civil liberties and due process, has led to a historic crackdown on the gangs. According to police intelligence documents obtained by InSight Crime, the government has arrested over 77,000 suspected gang members and so-called “collaborators” in the year-and-a-half El Salvador’s congress has prolonged the state of emergency. 

SEE ALSO: Are MS13 Leaders Wanted for Extradition to US Free in El Salvador?

These extreme measures have weakened the gangs, but news about their most important leaders is conspicuously absent from the near-constant government propaganda. And there are rumors that the leaders cut a deal with the government, allowing them to avoid extradition while facilitating the arrests of thousands of rank-and-file gang members.

The release of Crook contributed to these rumors. The government’s designated interlocutor for the talks was Carlos Marroquín, who regularly met with MS13 leaders in prison, the Treasury Department said. Marroquín also engineered Crook’s release from prison, the Salvadoran news outlet El Faro reported using audio recordings in which Marroquín himself is speaking to gang members. (El Faro also first reported on the negotiations between the government and the gangs, which InSight Crime corroborated with separate sources inside the Bukele government who participated in the talks.)

The motives for Crook’s release, however, were unclear. In the audio, Marroquín says he wanted to show his “loyalty and trustworthiness” to the MS13 during a time in which the talks appeared to be unraveling.

However, Crook’s sudden exit from prison came amidst a squabble between the US and El Salvador over the potential extradition of the MS13’s leadership for the 2020 indictment. It was also one of many strange occurrences regarding top-level leaders. InSight Crime, working with La Prensa Gráfica, documented three other cases where prison authorities could not account for the whereabouts of ranfla leaders.  

The US, of course, wants the leaders extradited to face terrorism charges. If convicted of these sweeping charges, they would face decades in prison. 

Crook, it seems, could be the first. 

*Carlos García contributed to the reporting for this story.

The post Capture of MS13 Leader Exposes US-El Salvador Rift appeared first on InSight Crime.

Mexico’s fast-tracked extradition of a top fentanyl trafficker to the United States and a months-long, underworld-enforced prohibition of fentanyl production suggest Mexico’s government and some of its most-targeted criminal actors may be trying to reset US-Mexico counternarcotics relations.

On September 15, Mexico’s government extradited Ovidio Guzmán López, a top leader of the Chapitos, one of Mexico’s most powerful criminal groups. According to multiple US indictments released in April, the group is the most prolific trafficker of the deadly synthetic opioid, fentanyl, to the United States. 

Guzmán López will face trial in Chicago, where federal authorities at the Northern District of Illinois indicted him on nine counts related to controlled-substance trafficking, arms trafficking, money laundering, and continuing a criminal enterprise.

Known as “el Ratón,” or the Mouse, Guzmán López was arrested in Mexico in January during what was the government’s second try to corral the elusive son of the legendary drug trafficker, Joaquin “El Chapo” Guzmán Loera. Along with three of his brothers, Ovidio is considered a leader of the Chapitos, one of the central pillars of one of the world’s most powerful criminal networks, the Sinaloa Cartel.

A Reset?

The extradition follows months of tense public and private communications between the United States and Mexico, during which President Andrés Manuel López Obrador, known as AMLO, has consistently denied that Mexican criminal organizations synthesize fentanyl in Mexico, in spite of strong evidence to the contrary and surreptitious diplomatic messages from his own security forces. 

The fentanyl trade has become a political touchstone in both countries, with some powerful Republican Senators calling for US military force to stem the trade. Fentanyl — sprinkled into fake prescription pills and legacy drugs — is responsible for tens of thousands of overdose deaths a year in the United States. 

In this context, the extradition of Guzmán López appears to be part of an effort to mend relations. Sherri Walker Hobson, a former US assistant attorney who prosecuted numerous fentanyl cases in California, said it moved faster than cases she worked in recent years.

“I’ve prosecuted Mexican cartel members who were pending extradition in Mexico for years before their ultimate extradition to the United States, so this expedited extradition of Ovidio Guzmán López is definitely strategic and political,” she told InSight Crime.

Guzmán López was a prized target for US law enforcement. The US Drug Enforcement Administration (DEA) — in particular its administrator, Anne Milgram — made Guzmán López’s organization, the Sinaloa Cartel, the bogeyman in the battle against synthetic drugs. And in the US indictments, prosecutors blame the 33-year old for developing the trade beginning in 2014 — a dubious contention given that fentanyl did not hit the US market in any substantive way until 2015 and even then mostly seemed to come directly from China — and trying to monopolize it in the years that followed. 

Notably, following the extradition, US authorities applauded the Mexican government. 

“We thank our Mexican counterparts for their partnership in working to safeguard our peoples from violent criminals,” the White House Homeland Security Advisor Dr. Liz Sherwood-Randall said in one of many US government statements lauding Mexican efforts. 

Sherwood-Randall’s statement also appeared to include a nod to numerous Mexican military personnel killed during the January capture of Guzmán López in a small town outside of Culiacán, Sinaloa, the heart of the Chapitos’ stronghold. The arrest operation came just over three years after an aborted effort to capture him in Culiacán, during which several people were killed and dozens injured as armed cartel members blocked bridges, burned cars, and threatened members of the families of the military based in the area.

Still, it’s not clear this extradition will placate US authorities, especially the more rabid politicians who appear poised to make Mexico-sourced fentanyl a major political issue during the 2024 elections. 

What’s more, experts believe the extradition is the least the Mexican government can do. 

“Is it good that Ovidio was captured and extradited? Absolutely,” Vanda Felbab-Brown, a Brookings Institution scholar who has long followed the fentanyl trade, told InSight Crime. “But I don’t believe it’s a fundamental reset in the relationship between the United States and Mexico. This is the minimum necessary to be able to demonstrate that there is cooperation.”  

The Fentanyl Prohibition

The extradition of Guzmán López comes as criminal organizations in Culiacán, the epicenter of synthetic drug production, have taken extreme measures to halt the production and trafficking of fentanyl through Sinaloa, in what is perhaps an effort to ease government pressure.

Three fentanyl suppliers — one a commander of a large synthetic production group, one an independent purveyor and producer, and one local cook, all of whom spoke on condition of anonymity — told InSight Crime during fieldwork in Sinaloa in September that they halted production and sales several months ago. Although they said their bosses didn’t explain their reasoning, the decision came following Ovidio’s arrest in January and the release of the US indictments against the Chapitos in April. 

The suppliers suggested the ban on the fentanyl trade and the judicial pressure on the Chapitos may have been related. 

“I don’t know why [the production] stopped,” the purveyor said. “But I am guessing that it is an agreement, so they leave them alone.”

Meanwhile, the cook said he thought it was related to US pressure.

“The DEA is very pissed with Iván and Alfredo,” he said, referencing Ovidio’s brothers, Iván Archivaldo and Alfredo, the duo that forms the heart of the Chapitos.

Our reporting follows a June 13 Ríodoce article, which said that fentanyl producers in the state had received an order from the Chapitos to cease all production and trafficking. 

Shortly after the Ríodoce report, authorities began discovering bodies on the outskirts of Culiacán. Some of these victims were found handcuffed, bearing signs of torture, and placed alongside hundreds of fentanyl pills.

The message conveyed by these killings was unmistakable: This is the consequence for anyone who continues producing and trafficking fentanyl in Culiacán. 

Other killings were less obviously related to the fentanyl ban but for local purveyors of the drug were equally alarming. On September 8, for example, authorities found the dead body of Luis Javier Benítez Espinoza in front of a local health clinic with multiple bullet wounds, according to a Ríodoce report.

Known by his alias “14,” Benítez had a $1 million reward for information leading to his capture issued by the DEA for alleged fentanyl trafficking. The suppliers told InSight Crime they suspected that Benítez was killed because he was defying the ban.

The fentanyl suppliers interviewed by InSight Crime alleged that networks associated with Ismael Zambada, alias “El Mayo” — another pillar of the Sinaloa Cartel — were also enforcing this shutdown.

“Right now, everything is at a standstill; we cannot work,” the independent purveyor told InSight Crime.

A Surge in Disappearances

The implementation of this order has sparked a surge of violence and disappearances in Culiacán and the surrounding regions.   

“Anyone who disobeys must be executed,” one criminal security chief affiliated with the Chapitos told InSight Crime, speaking under a strict anonymity agreement.

The security chief estimated that a minimum of 50 people have been killed for defying orders regarding the production, trafficking, and consumption of fentanyl. The commander who spoke to InSight Crime also said he thought that close to 50 people had been killed for defying the production order.

The security chief said he manages a group of 20 enforcers who spend their time identifying those defying these orders, carrying out their executions, and confiscating all their production materials, including precursor chemicals. 

While some victims have been left in public places, the underworld sources consulted by InSight Crime said the majority have been murdered in remote areas and their bodies disappeared. 

“We find nearly all the fentanyl cooks in the mountains,” the security chief said, implying they also leave their dead bodies in those areas. “There have only been a few in the city.”

Statistics from the Sinaloa state government back their assertions. While the number of homicides has remained relatively stable compared to the first four months of the year, disappearances have surged, reaching a peak in July with 53 reported cases. 

This corresponds with a pattern observed in Sinaloa over the past three years, where criminal organizations employ disappearances as a means to punish those who defy the rules related to drug markets, while striving to maintain control over homicides, so local politicians can tout their security successes.

*With reporting from Miguel Ángel Vega.

The post An Extradition (and a Fentanyl Prohibition) as Mexico Tries a Counterdrug Reset appeared first on InSight Crime.

Human trafficking is one of the most complex and misunderstood criminal economies in the world. This is especially true along the US-Mexico border, where a smattering of organized crime groups operate with varying degrees of power and sophistication and engage in a wide variety of criminal activities. Estimates vary, but there are now several hundred crime groups operating across Mexico, many of which are connected to human trafficking.

*This article is the first in a three-part investigation, “The Geography of Human Trafficking on the US-Mexico Border,” analyzing how human trafficking networks operate along different parts of Mexico’s northern border with the United States. Download the full investigation here.

The question is, what type of connection do they have? Officials often portray human trafficking as being controlled by large, organized crime groups — frequently referred to as “cartels” — but the reality on the US-Mexico border illustrates there is a far wider array of groups behind this problem. This report aims to sort through this difficult terrain and analyze the ways in which different types of organized crime groups are involved in human trafficking. The goal is to inform policymakers who are looking to address human trafficking, so they can better focus their limited resources. We also aim to provide relevant stakeholders with opportunities for positive intervention to mitigate this problem.

The findings are based on two years of desktop and field research across the Mexican states of Baja California, Chihuahua, Sonora, and Tamaulipas. It includes dozens of in-person and remote interviews with sex workers, trafficking victims, anti-human trafficking advocates, prosecutors, security experts, government officials, researchers, and academics. The team also visited several cities along the US-Mexico border that are known to be major human trafficking hotspots. In addition, we analyzed government data on human trafficking investigations and prosecutions, judicial cases, and previous studies on the topic.

Major Findings

1. There are four major criminal corridors along the US-Mexico border, each of which has a slightly different dynamic of human trafficking. Most of these operations are run by small, clan-based criminal groups who buy off and/or collaborate with corrupt local officials. In each, the extent to which Mexico’s major organized crime groups are involved in human trafficking varies significantly. This ranges from supplying victims to human trafficking networks to taxing those networks via extortion but rarely involves total control of these operations.

2. The corridors illustrate that human trafficking depends on the local organized crime landscape, the capacities of law enforcement, and migratory flows through these corridors. Mexican organized crime’s closest connection to human trafficking intersects with migrant smuggling. The two crimes are distinct, but vulnerable migrants often find themselves forced into working for organized crime groups or sexually exploited by opportunistic individuals responsible for guiding them through this area.

3. Policymakers seeking to deal with human trafficking would do better to push for further research and increased resources for data collection and analysis. There is a serious dearth of data related to this crime on both sides of the US-Mexico border, which contributes to uncertainty about where to target resources. Without systematic data collection on both victims and victimizers, it is difficult to understand the true nature of human trafficking in this space and thus focus resources towards mitigating its impact.

The post Human Trafficking on the US-Mexico Border: Family Clans, Coyotes, or ‘Cartels’? appeared first on InSight Crime.

Two candidates remain in Ecuador’s presidential race, and, regardless of their security strategies, neither can control the rising production of cocaine, which appears to be fueling the country’s spiraling violence.

The final candidates, Luisa González of the Citizen Revolution Movement (Movimiento Revolución Ciudadana), and Daniel Noboa of National Democratic Action (Acción Democrática Nacional – ADN), will compete in a runoff scheduled for October 15. 

Both have offered sketches of their proposals to fight the spiraling violence in the country. But there is one macroeconomic trend they are helpless against: cocaine.

SEE ALSO: In Ecuador’s Elections, Social Programs Won

Cocaine is the main driver of Ecuador’s criminal economy, and the rise in trafficking seems to have raised the stakes between criminal groups, as it coincided with an incredible increase in violence in the last few years.  

Burgeoning Cocaine Production

Ecuador is a transit country, and most of the cocaine moving through it comes from Colombia. How much is the subject of widespread speculation, but in 2019, Ecuadorian authorities told InSight Crime that over one-third of the cocaine produced in Colombia traverses Ecuador.

Others, including US authorities, told us that the amount was significantly higher. But, if we use one-third as a baseline, we can provide a rough understanding of how much cocaine is going through Ecuador, how much this amount has risen in recent years, and how this increase coincided with rising homicides. 

In 2021, the last year for which the United Nations and Colombia’s government released data, Colombia’s potential production of cocaine was 1,400 tons. If one-third of that traversed Ecuador, then the country received 467 tons of cocaine. This represents a 62% increase from 2016, when Colombia’s potential cocaine production was 866 tons, and an estimated 289 tons went through Ecuador.

Production areas along the border with Ecuador also saw increases in the production of coca, the raw material used to manufacture cocaine. Taken together, Putumayo and Nariño, the two Colombian states adjacent to Ecuador with the largest production, saw estimated coca production expand from 68,000 hectares to 85,000 hectares between 2016 and 2021.

During the same period there was also a marked increase in cocaine seizures in Ecuador, as well as seizures of shipments out of the country. In 2016, the Ecuadorian authorities seized 98 tons, according to data from the United Nations Office on Drugs and Crime (UNODC), while in 2022, they seized 179 tons, an increase of 45%. Seizures in other markets confirm these trends. In Europe, specifically, seizures of cocaine from Ecuador have gone from 9% of the total, or around 5 tons, to 33%, or around 57 tons, according to UNODC. 

Increased Stakes in the Criminal Market

Increased cocaine flows through Ecuador seem to have raised the stakes considerably for criminal groups. Different traffickers are known to calculate their costs in different ways. In other transit countries, we have seen groups that charge based on the change in price between when they receive the drug and when it leaves their hands. In Honduras, for example, that was about $2,000 per kilogram.

For a while, at least, Ecuadorian groups seemed to charge considerably less. According to testimony in the United States’ case against Joaquín “El Chapo” Guzmán, for example, Ecuadorian traffickers once collected $100 per kilogram to move cocaine through the country and $3,000 per kilogram to bring it to the coast of Mexico.

SEE ALSO: 4 Reasons Why Ecuador Is in a Security Crisis 

Today, there are more sophisticated criminal groups in Ecuador who likely charge significantly more. And from our recent field trips to Ecuador, we can say the market is broken into three major groups. The first group moves cocaine on their fleet of fishing and go-fast boats to the coasts of Guatemala and Mexico where it passes the merchandise to the large drug trafficking groups, for which it charges $3,000 per kilogram. The second group moves cocaine from the Colombian border to seaports where it hides the drug in containers that are shipped to consumer nations, charging close to $2,000 per kilogram. The third group does logistics for drug trafficking groups who fly their aircraft into Ecuador on their way to traffic the drug elsewhere. We estimate this third group charges close to $200 per kilogram.  

Ecuadorian authorities told InSight Crime the first group represents 30% of the market. We estimate the second group represents 50% and the third group 20%. Based on our previous estimates that one-third, or about 467 tons, of Colombian cocaine goes through Ecuador, this would be a $953 million market for the year 2021. This is up from an estimated $590 million market in 2016, when cocaine production figures from Colombia showed that 289 tons could have gone through Ecuador. To put this into perspective, $953 million would make cocaine Ecuador’s sixth largest export, above cut flowers, cocoa beans, copper, and gold, according to data compiled by the non-governmental Observatory of Economic Complexity.

Of course, a $953 million market for local criminal groups can be a multibillion-dollar market for foreign criminal organizations who can gain control of the cocaine at an earlier point in the distribution chain, incentivizing their increased involvement and perhaps adding to the competition in Ecuador.

A Rise in Violence

The increase in cocaine production and proceeds coincided with a startling rise in homicides in Ecuador, from 6 per 100,000 in 2016, to 25 per 100,000 in 2022. That rise in violence aligns geographically with the country’s main cocaine corridors. One of the routes runs at least partially through the Pacific coastal state of Esmeraldas, which was the country’s most violent province last year. According to Ecuadorian government data, in 2016, Esmeraldas had 74 homicides; in 2022, it registered 522, giving it a homicide rate of 81 per 100,000.

Trafficking groups also use the port of Guayaquil, in Guayas province — the country’s busiest port and the second-most violent province in Ecuador — as a hub and embarkation point. There, homicides rose from 293 in 2016 to 2,033 in 2022, giving it a homicide rate of 46 per 100,000. Other provinces that saw rises in violence, including Manabí and Los Ríos, also coincide with these routes.  

These calculations are obviously crude and do not take into consideration numerous other factors, including local drug markets. However, the correlation between cocaine and homicides seems clear, at least from this preliminary glance. 

This leaves presidential hopefuls González and Noboa in a difficult spot. To their credit, they have both offered nuanced and less militaristic options than some of their political counterparts in Ecuador and beyond. But if these macroeconomic trends continue, they may be facing extreme violence for some time to come. 

The post The Cocaine Problem Ecuador’s Presidential Candidates Cannot Wish Away appeared first on InSight Crime.

More than two months of travel across eight countries. Regular run-ins with corrupt police and migration officials, organized crime groups, guerrillas, and smugglers. This is the journey thousands of migrants from Venezuela take to reach the US-Mexico border.

*This article is the first in a three-part investigation, “Unintended Consequences: How US Immigration Policy Foments Organized Crime on the US-Mexico Border,” analyzing how prevention through deterrence policies have bolstered Mexican criminal organizations. Download the full investigation here.

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*For security reasons, InSight Crime has changed the protagonist’s name.

The post The Gauntlet: One Migrant’s Journey from Venezuela to the US-Mexico Border appeared first on InSight Crime.