While Rudy Giuliani rushed to Bill Barr to rescue Alejandro Betancourt from trouble, and Juan Guaidó‘s closest relatives offered help, Nicolás Maduro realized the profound implications: Venezuela could shift from its dependence on oil to money laundering. Venezuela is perfectly positioned and is indeed the chosen launchpad for most of the cocaine produced in the neighboring Andean region that enters international markets. The country has a completely corrupt banking system, overseen by figures like Antonio “Catre” Morales, who is already well-versed in drug trafficking. The Venezuelan state has a foothold in the Russian banking system through Evrofinance Mosnarbank, receiving full support from Putin. In fact, Russia’s banking system has supplanted that of the United States, and nearly all of Venezuela’s banking needs are channeled through it. Colombian drug cartels and narcoguerrilla groups operate freely in Venezuela, in partnership with chavismo.
Drug trafficking generates endless cash flow. Oil trade, under the current sanctions regime against PDVSA, also forces parties to be creative with invoicing, accounts receivable, and more. There will always be bankers, intermediaries, firms, and financial supervisors ready to step in. So Maduro must have thought: let’s ensure we wash all that money here. Acceptance has been immediate: bodegones are springing up everywhere, local businesses are raising capital through “share offerings,” banks provide “entrepreneurs” loaded with cash to accumulate foreign currency, and the economy has dollarized in everything but name… It’s a win-win for chavismo, its criminal partners, and special interests. No one else participates or benefits from the money laundering bonanza, least of all hospitals, schools, and ordinary Venezuelans.
Remittances do not arrive in cash trucks but through a vast network of international operators who have accounts in local jurisdiction and Venezuelan banks. FX is exchanged in the daily black market. Imagine a Venezuelan exiled in the U.S. wants to send money to their family: they pay USD to an unregistered operator, John Doe, who receives the USD in their U.S. bank account and transfers an equivalent sum in bolívares in the parallel market to the recipient from a local Venezuelan account. That local account in BsF must be replenished at regular intervals. Fictitious transactions occur between local firms, invoices are issued, and payments are made in BsF. The markup is integrated into the parallel FX rates, explaining how drugs, corruption, oil, gold, and extortion money enter trade flows.
Venezuelan banks cannot simply give USD to local account holders, unofficially, unless we’re talking about clients using bank vaults to hold their own USD. However, when PDVSA, or its subsidiaries, accept or transfer cash to state banks, of course, no questions are asked. Given PDVSA’s opacity, who can say if that amount is oil-related or if it comes from Tareck el Aisami or Diosdado Cabello from drug trafficking? Given the track record of most Venezuelan banks and bankers, who can stop a Francisco Convit or a Raúl Gorrín from walking in with bags of cash brought from Russia? Who will question the origin of that money, the compliance staff of Juan Carlos Escotet? The partner of Luis Oberto José Antonio Oliveros Febres-Cordero? Víctor Vargas or the Gill brothers?
It is a perfect case study of a jurisdiction where criminals control all oversight bodies, institutions, and official tools to build the perfect money laundering economy. No one reviews anything. No authority asks questions. No bank complies with international compliance standards. Industry, banking, financial authorities, politicians, and criminal gangs benefit from a regime intent on survival, regardless of the consequences.
Meanwhile, Putin moved. He must be thinking that Venezuela is simply perfect, the Syria of Latin America. His foreign envoy, Lavrov, will likely visit this week to instruct Maduro on how to privatize “successfully.” Who has the cash to benefit from chavista privatization plans? Well, “businesspeople” who have been repatriating the spoils, drug traffickers, connected chavistas, gold traders…
In the short term, Venezuela’s economy will become less reliant on oil. Following a wave of privatizations fueled by large-scale money laundering, a new “business class” will emerge. The perfect criminal is not English, Swiss, Nigerian, Chinese, or Russian. We will have our Abramovichs, Usmanovs, Deripaskas, etc., who, unlike in Russia, will get away with what they have done. Annex 1 Raúl Gorrín; 2 Alejandro Betancourt, 3 Juan Carlos Escotet, 4 Oswaldo Cisneros… They will never be targeted by the FSB. No local authority will ever pursue them.