Secret documents leaked to OjoPúblico reveal that more than $2.2 billion linked to suspected criminal activity entered Peru’s financial system through clients with alleged ties to drug trafficking, illegal gold mining, tax evasion and corruption.
OjoPúblico reached out to Banco de Crédito del Perú and BBVA Continental, the country’s two main banks, to learn more about why they accepted clients linked to organized crime. The banks declined to respond, citing financial secrecy laws.
The investigation reveals the banking system’s role in money laundering by organized crime groups and inaction by Peru’s only state oversight entity, the Superintendency of Banks, Insurance and Pension Funds (Superintendencia de Banca, Seguros y AFP – SBS), revealing multiple cases of noncompliance with regulations intended to combat such crimes.
OjoPúblico obtained access to secret documents from Peru’s Financial Intelligence Unit (Unidad de Inteligencia Financiera – UIF), a key player in the country’s fight against money laundering. The documents show that at least $2.2 billion from allegedly illegal activities entered the financial system since 1998.
Based on the UIF documents and numerous statements from Peruvian anti-narcotics police, OjoPúblico created a preliminary list of banking clients with suspicious financial histories. The list highlights individuals and companies that US agencies, including the Justice and Treasury departments, have accused of laundering money from illegal mining or drug trafficking.
After an analysis of more than 400 banking client profiles and suspicious transactions, OjoPúblico narrowed its focus to the two largest banks in Peru: BBVA Continental and the Banco de Crédito del Perú (BCP). Other cases were detected in Scotiabank and Interbank.
In recent decades the US government and various European regulatory entities have filed criminal charges or issued sanctions reaching millions of dollars against banks for associating with criminal groups to launder money or violating practices to combat money laundering. Charges or sanctions have been leveled against such institutions as the Bank of Credit and Commerce International (BCCI) in the 1980s, HSBC in 2008 for laundering Mexican cartel money, and most recently Banca Privada de Andorra (BPA) and Meinl Bank, which were used by Brazilian construction firm Odebrecht to pay bribes throughout Latin America.
The Peruvian government passed legislation giving the SBS the authority to punish institutions for banking irregularities in an effort to prevent money laundering. But although the regulations require spotless conduct on the part of banking employees, diligence in identifying illicit behavior and knowledge of clients’ financial activities and public ties to criminal organizations, they are lenient given that the highest fine is only $130,000.
The cases published by OjoPúblico provide an unprecedented look into the types of clients the financial system — particularly BCP and BBVA — accepted and the allegedly unlawful operations they conducted. They also reveal deficiencies in the anti-money laundering system, such as lack of awareness of clients’ high-risk status, failure to detect the extent of penetration of dirty money and failure to address allegations linking bank officials to criminal groups.
Violation 1: Know Your Customer
Key Latin American drug trafficking figures at both the local and international level are among the clients identified as having carried out unusual banking activities at BCP and BBVA. Also on the list are the companies through which the same figures allegedly laundered their ill-gotten funds, including real estate, air transport and currency exchange businesses in Peru’s capital, Lima.
Sistema de Distribución Mundial, a front company for laundering the money of one of the most powerful drug traffickers in Peru, Fernando Zevallos Gonzales, alias “Lunarejo,” was a client of BCP, BBVA and Banco Wiese (owned by and rebranded as Scotiabank as of 2006). The majority shareholder in the company was the now defunct AeroContinente, which Zevallos founded and led. All told, the company made suspicious movements totaling $27 million between 2000 and 2004 in these three banks.
The US Treasury Department included Sistema de Distribución Mundial on its list of “derivative designations” under the Foreign Narcotics Kingpin Designation Act, and it has played a part in a money laundering investigation currently underway against Zevallos. Meanwhile, investigations by Peru’s anti-narcotics police indicate that Lunarejo ordered the murders of witnesses to his alleged criminal activities at almost the same time that Sistema de Distribución Mundial received or transferred dirty money via BCP, BBVA and Banco Wiese.
Zevallos’ criminal record for drug trafficking dates back to 1982, and he has been implicated in the 1989 killing of journalist Todd Carper Smith and other unresolved murders in the city of Lima and Huallaga province. The UIF documents show he allegedly used Sistema de Distribución Mundial as a front to move $20.3 million through BBVA, $5.3 million through Banco Wiese and $1.5 million through BCP. Since 2005, Lunarejo has been serving a 20-year sentence for drug trafficking and faces possible extradition to the United States.
Another notable client to appear in the UIF documents was the network of Peruvian currency exchange houses linked to Chilean Mauricio Mazza-Alaluf, who has been indicted by the US Justice Department and accused of laundering money for Colombian criminal groups including the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC). Over 150 people in Peru were involved in the exchange houses, which deposited $369 million into accounts with BCP, BBVA and other financial entities. The network’s modus operandi was to transport bills — either stacked in suitcases or glued to the body — through airports in Peru, Chile, Colombia and the United States, leaving the cash in exchange houses in the destination countries, then dividing it up into successive deposits and transfers.
BBVA’s client list also included Global Trade Import and Export, which was run by a drug trafficking group that orchestrated one of the most memorable drug shipments in Peruvian history. The company attempted to ship 4.3 tons of liquid cocaine to Spain by hiding it in 8,000 cans of artichokes. UIF documents state that this shell company was only one operation in a more than 100-member organization that used “the banking system … to facilitate its criminal activity.”
Violation 2: Suspicious Activity Reports
As the banking oversight body in Peru, the SBS is tasked with preventing money laundering within the country’s financial system, including its banks, municipal and rural credit institutions, and small business development entities, among other institutions. In response to an inquiry, the SBS informed OjoPúblico that only 16 sanctions have been issued within the financial system since 2002, including four against BCP for failure to prevent money laundering. BBVA has only received one reprimand.
However, an analysis of the documents — cross-checked with reports from the Peruvian anti-narcotics police, the National Superintendency of Tax Administration (SUNAT), the money laundering unit of the Attorney General’s Office and the well-known Panama Papers — allowed OjoPúblico to identify cases in which banking institutions like BCP and BBVA violated one of the most important of Peru’s anti-money laundering measures: notifying the UIF of suspicious transactions within the maximum warning periods required.
For the last 20 years, management or compliance divisions for the prevention of money laundering in the financial system and related companies were required to report suspicious transactions to the UIF within 30 days no matter how great the amount of money. In 2017 that period was shortened to 24 hours.
According to OjoPúblico’s analysis, there were hundreds of cases in which institutions in Peru’s banking system notified the UIF of irregular transactions with suspected ties to organized crime and tax evasion an average of four months after they occurred or were known to have occurred, in other words, five times the maximum period allowed by the SBS for such notifications. In some situations, the delay was as long as five years, and in others the bank only sent a notification after receiving a warning itself.
OjoPúblico detected this pattern of late reporting — considered a serious violation resulting in the maximum $130,000 fine — in some of the most important money laundering cases in recent years.
OjoPúblico identified cases in which banking institutions like BCP and BBVA violated one of the most important of Peru’s anti-money laundering measures.
According to the UIF documents, one of BCP’s clients was alleged Peruvian drug trafficker Paul Chinchay Echevarría, who was convicted of human trafficking in Italy. BCP took a year and four months (491 days) to report Chinchay to the UIF, and by the time they did — for suspicious transactions totaling more than $178 million — he had already been detained and indicted on other criminal charges.
In 2002, Peru’s anti-narcotics police targeted a currency exchange organization for the first time for laundering drug trafficking money, later considered a key link in a network of Latin American money transfer businesses. The suspects in the investigation were Percy Velit Núñez — a BBVA client from July 2006 until his arrest in May 2008 — and his sons Sandro and Percy Velit, linked to Amasban S.A. and Money Express SRL in Lima.
When the investigation went public in 2008, the police and the Attorney General’s Office had already established that the Velit family’s currency exchange houses were laundering money for Colombian criminal organizations. Despite this revelation, BBVA did not freeze the Velit Núñez accounts, even when its own money laundering prevention unit sent its first alert to the UIF in October 2006 for frequent, unexplained national and international transfers.
Another warning for suspicious banking activity by Velit Núñez was delivered to the UIF by BBVA in June 2008. But that was a year after the previous warning, and in response to media reports on his arrest in connection with the anti-narcotics police investigation into the family behind the currency exchange houses. The head of the group of suspects was Chilean Mauricio Mazza-Alaluf, who was tried and convicted in the United States.
Violation 3: Lack of Due Diligence
Analysis of the UIF documents provides an uncensored look at BCP and BBVA’s questionable handling of prevention and compliance when they discovered that a client was conducting suspicious banking activity. The documents show, for example, instances of warning clients, by phone or other means, when they detect unusual transactions, even when the banks have clear evidence that the client is a front man, having no financial history and residing in poor Lima neighborhoods or even informal housing settlements.
In the cases OjoPúblico analyzed, BCP compliance management sent letters to some of its clients in Lima to inform them of unusual transactions and to give them an opportunity to explain them. The letters are quoted as saying, “Dear sir, we are writing to express our appreciation for the trust you have placed in us when conducting your banking transactions through our institution. The aforementioned transactions are for significant amounts.”
OjoPúblico examined the profiles of the BCP clients who received the letters and discovered that most were between 20 and 23 years old, they were not registered as employed and they had no financial history, yet they were able to move more than $3.4 million in national and international transactions in just a few months. Analysis of these cases leads to the conclusion that effective processes and due diligence in preventing money laundering are significantly lacking, especially if the banks warn the suspects beforehand.
When the banks inform their clients of the suspicious transactions they detected, some will inevitably take measures to hide the source of their funds. In one case, Interbank contacted a suspected member of a group that smuggled products out of Bolivia. A total of $2.3 million had been deposited into that client’s accounts.
According to the UIF report, in the telephone call Interbank made to the client, the bank employee informed the alleged smuggler of the suspicious transactions and requested an explanation. The client admitted that the money came from illegal sales of soy on the Bolivian border, but refused to provide the name of the company behind the operations. Interbank reported the incident, but not until five months after the last suspicious transaction.
After receiving Interbank’s report on the incident, the UIF concluded that the smugglers might be “using or attempting to use another financial institution due to the level of funds they were managing and the apparent necessity to move them quickly.”
BCP compliance management sent letters to some of its clients in Lima to inform them of unusual transactions and to give them an opportunity to explain them.
Criminal activities also expose loopholes in the existing regulations, a sure sign that they are in need of revision.
Analyses revealed that BCP holds on to reports on its clients’ suspicious transactions for ten years in accordance with the regulations. However, this can become problematic when the UIF investigates individuals suspected of crimes over longer periods of time, such as when it requested information from BCP in 2008 on a high-level army official who had received $11 million in payments to his account after he was appointed mayor of the provincial capital of Bagua in the region of Amazonas.
The UIF first learned about the case of Army Colonel José Sánchez Marín (now retired) in a suspicious transaction report from BCP in 2005. At the time, it requested older banking information, suspecting the military official may also have irregularities in his banking history from his term in the same city during the 1990s. But BCP responded that it was not required to maintain information for longer than 10 years and only sent a few withdrawal checks.
Later, the UIF managed to learn that the army official remained with BCP until 2008, when the bank issued a new report on him. Before the first suspicious report in 2005, Sánchez Marín, already retired, had made investments in Credicorp, Backus and Telefónica that could not be supported by his income. He then let the money sit until he withdrew a portion in 2005. Afterwards, he invested that money in a mutual fund with Credifondo, which was reported because the amounts of those transactions could not be supported either.
Violation 4: Employee Vetting
The UIF documents also call into question whether the financial system has fulfilled its requirement to maintain a high level of integrity in its personnel. OjoPúblico found four cases in which BCP and BBVA employees, some of them working in high-risk regions like Áncash and Loreto, belonged to organized crime groups.
In the first case, a UIF report identified a BCP employee in Chimbote, Áncash, as a mafia group’s “financial advisor.” The group injected millions of dollars into the system through irregular transfers from Colombia using dozens of front men without any financial history or credit. The intelligence document sent to the Attorney General’s Office contains conclusive evidence against the bank employee.
“The organization may be using Jimi [Henry] Orellana Domínguez, a BCP official and recipient of $425,000 dollars in transfers from Colombia for consulting services, [because he] ‘requested information’ on alleged organized crime members from the Serviban [now Western Union] agency in Chimbote. Given that, as a banking official, he knows about the anti-money laundering controls in the system, it could be assumed that he may have advised [the organization] to deposit $5.8 million dollars into the financial system. These are aggravating circumstances considering he is [a BCP] agent,” the document states.
Orellana Domínguez was a BCP employee between 1999 and 2009, when he joined the José Gálvez de Chimbote soccer club and gained regional fame as its manager. During that time Orellana was implicated in an alleged prostitution ring possibly involving minors.
Another case links criminal groups to BBVA. In 2009, the Attorney General’s Office identified Sergio Cisneros Francia, current branch manager in the San Isidro district of Lima province, as having collaborated with the group behind Global Trade Import and Export and one of the largest attempted drug shipments in Peruvian history. Case documents reveal that, “as a BBVA manager, he may have helped Jorge Luis González Sánchez and Alex Ángel Montoya Agüero with the legal procedures to set up Global Trade Import and Export.”
Later, in September 2017, Peru’s anti-narcotics police seized 4.3 tons of cocaine hidden in canned artichokes bound for Spain. The exporter? BBVA client Global Trade Import and Export. After the operation, the Attorney General’s Office opened an investigation against a criminal organization comprised of more than 100 people — one of whom was Cisneros Francia — for allegedly laundering illicit profits through successive deposits and transfers in the financial system.
Relationships between bankers and organized crime date back further than the 2010s. In 2001, after the fall of the Alberto Fujimori administration, a criminal investigation targeted BCP’s then-Chairman of the Board Dionisio Romero for his contacts with former presidential advisor Vladimiro Montesinos, but his case was dismissed in 2005. Thirteen years later, José Graña Miro Quesada, another BCP official, left his post after being investigated for money laundering in the Operation Car Wash case.
OjoPúblico obtained statements from BBVA and the BCP on the cases in this investigation. Both banking institutions stated that they maintain high standards in their money laundering prevention systems and comply and collaborate fully with authorities.