Status of Financial Crimes in Ecuador

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Introduction

Financial crimes can be described as those which involve unlawful acquiring of an individual’s property for self-gain.  Crimes like this include fraud, market manipulation, tax evasion, embezzlement of funds. And the production of counterfeit goods. According to Fontaine, G. (2014) the victim in financial crime setting may include Individuals Corporation and governments. Financial crimes have increased drastically around the globe becoming a major issue of concern. This essay will focus on the background of financial crimes and evaluate the government’s response and future projections to end the practice in Ecuador. To achieve the research must have an inclining to the present laws and how the government is striving to eradicate the menace. 

History of Ecuador

The republic of Ecuador is a country found at the North West side of North America. It is bordered by Colombia on the north, on the west is the Pacific Ocean and Peru to the east and south. The countries capital city is Quito. The largest city in Ecuador is Guayaquil.it is perceived to have achieved independence in 1820 and gained sovereignty in the year 1830. The country practices a democratic type of government with the president as the head of the state.  He is expected to serve for a four year term under the constitution. Ecuador is   classified a developing economy country relying heavily on petroleum and agricultural products for sustenance.  In agriculture equator ids the Worlds larges banana exporter with an estimated income of 936.5 million gained from the trade in 2002 (De la Torre, C. (2006).  Petroleum products and oil refinery accounts for about one third of the Ecuador’s revenue which translates to around 40 percent of the nation’s exports. The economy of the country is seen to always record a positive index. Ecuador is the recognized as the first world in the world to enhance law that relate to the natural ecosystem (rights of nature). The language that is spoken by the majority people in Ecuador is Spanish. Amerindian language is also a major language in the country spoken by an estimated 2.5 million people. Ecuador has faced many financial crimes over the years. 

History of money laundering

Financial crimes have been a major problem in Ecuador.  There is sufficient evidence that can be used to relate most financial crimes that take place to occur mainly through trade and other commercial activities in the country.  The extent in money laundering occurs cannot be easily estimated due to the fact that only major banks possess measures that are aimed at maiming financial crimes that are carried out through money laundering (Romero, S., & Krauss, C. 2011).. Another factor that makes it very difficult for the government to intercept money laundry is because it mostly occurs in unregulated money exchanges. Financial crimes in the republic of Ecuador can be said to have risen during the 2000s; a period which was full of political instability. During this time Ecuador’s currency is said to have lost 40 percent value when compared to the United States dollar.  The economy went further down when President Jamil Mahuad was overthrown in January of 2000.  During this time the nation turned on to foreign debts and even went to the extent of privatizing state owned industries. Financial

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 Crimes then   reached an ultima of becoming a hindrance to investors in Ecuador. The crimes that consists of corruption, bribery and facilitation payments are largely spread-out in the republic. Corruption as one of the financial crimes in the republic, mainly occurs in the judicial system setting of the country. According to Whytock, C. A. (2012, how the judges and magistrates of the republic receive pressure and interference reflects the extent of corruption in the system.in the setting judges are bribed in order to rule in favor of the briber. In most cases accusations that occur in this republic seem to have a political motivation which leads to inconclusive judicial proceedings. The police are also a scheme that promotes financial crimes through corruption and recruiting services.

Financial crimes and scandals

The public service sector is one that carries a high money laundering risk for businesses in the state. Companies in the country are cited complaining of the frequent demanding of huge bribes by the local authorities in order to acquire   the necessary documents to run a business.  A report released by the  World Bank in 2012 showed that  over 30 percent of all businesses in the republic of Ecuador were not formally registered which depicts a wide corruption network in the country (De la Torre, C. 2006).

Other major platforms that exhibit financial crimes are the land administration, tax administration and the customs administration sector. Here, private property can be seen to have been somehow jeopardized by the governments view towards it by using various threat methods like nationalization to pile a lot of pressure on private companies. The World Bank report also counts on how the large companies in the country paid less taxes which shows the wide extent of financial crime circuit in the country.

Ecuador is a country whose records when evaluated shows hedge flows of cash entering and leaving the country’s borders. The cash ferried in this case is usually of undeclared worth and reflect the voluminous financial crimes in the republic (Whytock, C. A. 2012),. Low level criminals in the region have been noted to cross Ecuador borders to deposit amounts of money into various accounts under the $10000 scheme which helps them to escape from the currency transaction reporting requirements.

A good example of financial crimes is   how a huge amount of money estimated to be over $13 million was able to be stolen from the central bank of Ecuador aided by the Mayor of Riobamba, Juan Salazar Lopez. After extensive investigations were done it was evident that the mayor had shared the account details with unauthorized persons. Another instance of a financial crime is the governments awarding of contracts worth $ 167 million to the president’s brother.  The contracts were rendered as unfulfilled in the procurement website owned by the state. The commander in chief and other high profile figures in the police setting were proved to facilitate the   transfer of other officers it different towns in the country for  bribed  that wryer estimated to be in the range  of $1500 to $4000.  In that specific year more than 47000 transfers took place which led to a collection of an estimated $ 16 million.

Perhaps the most recalled financial crime is the one that revolves around the petro Ecuador Company. The company was found to have taken part in money laundering and extorting and the absorbing of the Ecuadorian judgement in order to cover their name.

Financial Crimes Laws and Regulations

The release of the Organic law of Prevention ,Detention and  Eradication of Financial Crimes , the AML law gives mandate to the Ministry of political Economy to control the Financial and economic analysis . The law above the ministry complete control of the UAFE which requires continuous reports to be delivered. The 2016 AML low is centered on one joint and includes that in a case where currency is not put into records a 30 %fine is rendered (Dirani, V. M. 2003).

The ENP money laundry unit is set to investigate cases that deal with financial crimes. Judges are trained on AML rues in order to avoid wrong interpretation of the constitution. The constitution uses the criminal code to criticize financial crimes. Therefore officials are warned to perform their duties according to the set prohibitions. This segment also covers the public procurement laws.in the procurement laws giving a contract to a person who either directly participates or has an influence over it is banned.

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In relation to mentioned financial crimes, penalties to those who do follow the rules is subject to punishment. Anyone taking bribes is liable to 5 years in jail with an assurance of 7 years if the crime leads to another scandal. Extortion which is common in acquiring of the necessary business punishment has a penalty of up to seven year I prison.

The constitution goes ahead in article 77 to indicate that people who have been convicted of financial from holding up a senior position. Lately article 113 has been modified to restrict people convicted of financial crimes of running for elective posts.

Government achievements in eradicating financial crimes.

The government of Ecuador has can be noted to have taken major steps in ensuring that financial crimes reduce drastically. For instance between 2013 and 2017 about 1000 officers were relieved of their duties for getting involved in an exhortation ring. The government has also been able to save huge amount of cash that were believed to be used in financial crimes. In august for instance the government was able to nub more than $130 million that was suspected to facilitate suspicious exports to Venezuela.

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The government should follow its commitment in order to comply fully with the set CFT standards. They should freeze all terrorist accounts and criminalize bulk cash smuggling within its borders. The government should also be devoted to ensuring money laundering and the private sector corruption and share with the public.

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  1. De la Torre, C. (2006). Populism and democracy: Political discourses and cultures in contemporary Ecuador. Latin American Perspectives, 24(3), 12-24.
  2. Romero, S., & Krauss, C. (2011). Ecuador judge orders Chevron to pay $9 billion. New York Times.
  3. Whytock, C. A. (2012, January). The Chevron-Ecuador Case: Three Dimensions of Complexity in Transnational Dispute Resolution. In ASIL Annual Meeting Proceedings (Vol. 106, pp. 425-428). American Society for International Law.
  4. Dirani, V. M. (2003). The Role of Civil Society in Promoting Transparency and Fighting Corruption in Ecuador. Sw. JL & Trade Am., 10, 319.
  5. Fontaine, G. (2014). Indians, Oil, and Politics. A Recent History of Ecuador. ALLEN GERLACH: Wilmington, DE: Scholarly Resources, 2003. Estudios Interdisciplinarios de América Latina y el Caribe, 15(1).
  6. https://www.knowyourcountry.com/ecuador1111
  7.  http://www.state.gov/s/ct/rls/crt/
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