Against the background of the implications of Venezuelan gold being smuggled through Guyana, we offer the following, excerpted from the Organisation for Economic Co-operation and Development’s (OECD) 2021 report: Gold flows from Venezuela as background.
“As highlighted by the Financial Action Task Force, gold is a preferred medium for illicit finance. It is highly valuable, portable and capable of holding its value even during significant market shocks in markets around the world. As an element, it is very difficult to trace through chemical analysis. It can be reshaped in myriad ways or literally blended into anonymity. Perhaps most importantly, gold is not intrinsically illicit, so it can be laundered easily into legitimate supply chains, contributing to the greying of local, national and regional economies and even the global financial system. In this context, gold flows from Venezuela present serious challenges.
Since the nationalisation of Venezuela’s mining industry in 2011, criminals of various kinds have encroached on the country’s gold mining sector. In the five years since the 2016 decree establishing the Orinoco Mining Arc (AMO) in the south of Venezuela, gold mining has expanded beyond the confines of the AMO. Over the same period, the volumes of gold flows out of the country have only grown in scale. The risks linked with those flows extend beyond human rights abuses and environmental destruction and include criminal economies linked with various forms of trafficking and money laundering, as well as the financing of terrorism.
While it is extremely difficult to estimate gold production in Venezuela, processing capacity and reporting suggest that it could conceivably amount to as much as 75 t per year; as of July 2021, the market value of that production would exceed USD 4.4 billion (United States Dollars). Research suggests that actual current production throughout Venezuela amounts to a third to half that amount. Gold flows within Venezuela can be categorised under two broad headings: centralised and dispersed.
The centralised flows carry a portion of production from the country’s myriad small mining operations – there is no large-scale mining currently in Venezuela – to the government-monitored trading hubs in cities such as El Callao, where some is purchased by buyers representing Venezuelan elites. These flows also include the substantial and expanding trucking of gold sands and other crude material from shuttered and operational mines as well as alluvial deposits to cyanidation plants in Bolívar state. The production from those facilities appears to be divided between the Central Bank of Venezuela (BCV) and politically exposed persons (PEPs). While centralised flows of gold out of Venezuela might be considered legal, it is still necessary to carry out enhanced due diligence to ascertain whether conditions of extraction and trade are associated with actual or potential risks of severe human rights abuses, conflict financing and other financial crimes.
In contrast, dispersed flows are those that leave the country from mining areas by various other routes. The Venezuelan military and political elites, Colombian militant groups, and domestic gangs are reported to be key actors in both categories of domestic gold flows. While centralised flows reportedly include gold transfers from the BCV to foreign governments and other entities in Turkey, the United Arab Emirates, Iran and elsewhere, transnational dispersed flows reportedly benefit a wider and more overtly criminal range of actors, including criminal cartels, Colombian Grupos Armados Organizados (GAOs) and designated terrorist organisations.
Gold from dispersed flows departing Venezuela appears to be laundered primarily within the Latin America and Caribbean (LAC) region, mainly in one or more key regional transit hubs. Currently, these have been identified as Colombia, the Dominican Republic, Brazil, Suriname, Guyana and Panama, and there are some reports of potential laundering elsewhere in Central America and in Mexico. Laundering networks can, however, extend across the globe, and actors connected with Europe, the US, China, the Middle East and possibly West Africa have also been implicated. Reports suggest that some gold laundering may involve informal value transfer systems that reach the Middle East and China.
Apropos an explicit Guyana connection, the report states, “Nazar Mohamed, owner of Mohamed’s Trading, has been characterised as aggressively pursuing Venezuelan gold, some of which originates with the ELN” (a Colombian guerrilla group that collaborates with the Maduro government).
