By In Sight. The discovery of a forgery operation in Cali with the capacity to produce up to three million fake dollars a week draws attention to the scale of Colombia’s counterfeit industry, an old and profitable branch of organized crime with links to the country’s various illegal armed groups.
Police seized more than $2.5 million in fake dollar bills in the swoop, and said that the operation likely shipped its products abroad to countries like China. The factory, located in the city center, functioned as a licit printing shop by day, transforming into a counterfeit operation by night and on the weekends (see El Pais’ video below).
Colombia was for decades the world’s biggest producer of fake dollars, and has only recently been topped by Peru. The counterfeit industry has synergies with the better-known illegal drug trade, and indeed Colombia’s fake dollars often take the same journey as its cocaine, going north through Central America and into the United States, according to a 2006 U.S. Treasury Department report.
Just as the existence of pre-established networks for buying, selling and smuggling emeralds helped the Colombian drug trade to boom in the 1980s, so the massive structures around the drug trade can now be used to facilitate the production and distribution of counterfeit currency.
In terms of profits, the counterfeit business can aspire to the same scale as the drug business. Taking forged currency together with the trade in faked goods, counterfeiting is the criminal industry with the second biggest turnover worldwide after the drug trade, at $250 billion a year, according to Global Financial Integrity’s report “Transnational Crime in the Developing World.” The report breaks this figure down to attribute approximately $90 billion to the biggest three markets in fake goods, leaving some $160 billion, most of which is likely made up by the fake currency business. This make the industry worth roughly half of the drug trade’s $320 billion global income, putting the two industries far above other competitors in the world of organized crime, such as the arms trade or human trafficking.
As well as providing massive profits, the forgery business is attractive for Colombia’s criminals as a lower-risk alternative revenue source to the narcotics trade, which in the last decade has faced massive U.S.-funded efforts to stamp it out.
While Colombia’s fake currency business is still likely separate from its narcotics trade, with most counterfeiting busts in recent years seemingly involving dedicated forgery gangs, the two industries are converging. A Harvard International Review report from 2006 said that both left-wing guerrilla groups and drug gangs are increasingly using counterfeit currency to fund their operations. This is backed by various reports in recent years of drug and weapon deals involving the use of counterfeit money, and assertions from the Colombian police that the rebels are now fabricating their own dollars.
The city of Cali, the site of this latest false currency bust, has for decades been the base for organized criminal groups. From the 1980s it was the center of operations for the Cali Cartel and later for its successor the Norte del Valle Cartel. With the dissolution of this powerful narco-trafficking group in the mid-2000s, criminal structures in the region were left at a loose end. This included forgers hired by the cartels to produce false documents and provide the fake money they used to pay their bills, setting the stage for the current counterfeit industry.
This week’s haul was by no means an isolated incident for Cali. In October 2009 state authorities dismantled a printing press in the city where they seized $3.75 million in false dollars, while in February 2010 a suitcase with hundreds of thousands of dollars worth of euros and dollar bills was found at Cali’s airport.
Latin America as a whole is a prime site for counterfeiting, due to weak law enforcement, low levels of state control in many areas, and high use of dollar.