Extortion payments in the Northern Triangle of Central America amount to over USD 1.1 billion per year

Proceeds from extortion in Guatemala, Honduras and El Salvador amount to more than USD1.1 billion annually according to a new study by Global Financial Integrity (GFI). The report, which examined data for individuals and businesses, also reveals that an estimated 330,000 people in the Northern Triangle region of Central America fall victim to extortion each year. Extortion against individuals is estimated at USD40 million – D57 million a year in Guatemala, USD190 million – D245 million a year in El Salvador, and D30 million – D50 million a year in Honduras. Data on extortion paid by businesses is not comparable across countries due to significant gaps in data availability.

The report, titled “Extortion in the Northern Triangle of Central America: Following the Money” , assesses the value of this activity and seeks to better understand how the proceeds of extortion are used and laundered. It also considers whether anti-money laundering and counter-terrorism financing (AML/CFT) strategies are being effectively utilized to combat extortion.

Tom Cardamone

“The human and societal costs of extortion far exceed the financial cost of these crimes,” according to Tom Cardamone, President & CEO of GFI. “Extortion causes significant harm to individuals, communities and businesses by damaging social networks, limiting economic growth, undermining faith in institutions, and causing displacement.”

For this report, GFI conducted in-depth interviews with subject matter experts from the private sector, including financial institutions, as well as from governments, international organisations and civil society groups. GFI also reviewed publicly-available information on law enforcement operations and legal cases to identify trends and typologies. Finally, it analysed a variety of data sources, including victimization surveys, to understand current trends in extortion and to estimate the financial value of this illicit activity.

Key findings:

  • Extortion leads to a variety of financial crimes including money laundering, terrorism financing and corruption;
  • Among experts interviewed, there was widespread consensus that extortion proceeds end up in financial institutions;
  • Some of the most common methods used to launder extortion proceeds include commingling funds with cash-intensive local businesses and opening accounts in the name of third parties in an attempt to conceal the illicit origin of the funds and their connection to criminal networks;
  • Financial institution compliance officers who report extortion-related activity to government authorities frequently face threats and intimidation.

ABOUT GFI: Global Financial Integrity is a Washington, D.C.-based think tank, producing high-caliber analyses of illicit financial flows, advising developing country governments on effective policy solutions and promoting pragmatic transparency measures in the financial system to promote global development and security.

www.gfintegritx.org