Unido Digital Media, LLC

This article, written by Sara Garcia, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

A recent case, together with several past investigations, shows how the music and events industry is being used by organized crime groups to launder money.

In early January, Colombian police captured Pedro Pablo Guzmán, alias “Pelomono,” at a concert in the municipality of Necoclí, Antioquia, in northern Colombia.

Pelomono is an alleged drug trafficker and member of the Gaitanist Self Defense Forces of Colombia (Autodefensas Gaitanistas de Colombia – AGC), also known as the Gulf Clan or Urabeños.

To cover up his role within the AGC, Pelomono purportedly used his legal companies and businesses, among which is a company in charge of financing and producing musical events in northern Colombia.

“This guy had several commercial activities as a front: a life of partying, dancing, beach trips, international activities, and high-end vehicles,” a member of the Colombian police’s Criminal Investigation and Interpol Directorate (DIJIN) told InSight Crime on condition of anonymity.

A Large Market

One of the largest revenue-generating markets in the world is the entertainment industry, which includes the music industry’s concerts, events, recording studios, and online music playback platforms. In 2022, Latin America saw a 25.9% growth in revenues from the music industry, according to the most recent report by the International Federation of the Recording Industry (Federación Internacional de la Industria Fonográfica).

The Colombian music scene has also seen significant growth in recent years. Not only has the country exported world-class artists, but in major cities such as Medellín, demand for recording studios has increased by 90%, according to Bloomberg.

But the industry’s profits have also attracted the attention of criminal actors and organizations seeking to launder money from illicit activities, such as drug trafficking.

Several factors make the music industry attractive for money laundering. According to Sergio Reyes Díaz, director of Infolaft Academy, an organization that offers training to anti-money laundering professionals in Latin America, one benefit is that the music industry works with businesses that handle large sums of money, permitting illegal actors to give the appearance of legality to illegal resources.

“We know that the music industry moves a lot of money, and that makes it vulnerable to criminal organizations that may be looking for opportunities to take advantage of its social recognition, infiltrate it, and use it to justify huge amounts of illicit money,” said Reyes.

Another characteristic that facilitates money laundering is that the industry’s supply chain is made up of many actors, some of whom may have internal controls to prevent money laundering, while others may not.

And the more actors involved in the chain, the more complicated it becomes for companies to carry out due diligence and ensure the legitimacy of each of these intermediaries.

“That’s why it’s so important for everyone involved in that industry to implement know-your-customer procedures, so they know who they’re dealing with,” Reyes said.

Front Companies

One of the main ways in which criminal groups launder money is through front companies, or businesses created to give a legal appearance to illegal activities or resources. This strategy is common within the music industry.

Pelomono’s activities appear to be a case in point. According to the Colombian police official, Pelomono used his various businesses — including his music financing and event production company — to launder money.

The AGC has used this same approach to launder assets in the past. At the beginning of 2021, for example, one of the main money laundering schemes for the AGC led by Jhon Fredy Zapata Garzon, alias “Messi,” came to light. Zapata used various strategies to launder drug trafficking proceeds, including financing musical groups and emerging reggaeton and popular music singers through a conglomerate of front companies.

Event Planning

According to Infolaft Academy’s Reyes, over-invoicing is another known-money laundering practice common across industries, whereby businesses report inflated sales in order to launder illegal resources.

In 2012, for example, the partners of the Colombian company Total Conciertos, which organized and produced a series of events, were investigated for allegedly laundering money for Colombian drug traffickers, such as the Calle Serna brothers and Daniel “El Loco” Barrera. According to a complaint that reached the Colombian prosecutor’s office, the producers attempted to launder $30 million through these events, which included concerts by Mexican singer Vicente Fernández.

This same firm was investigated in Spain for allegedly laundering money through Argentine soccer player Lionel Messi’s charity matches. According to the investigations, the strategy behind the scheme was called “Fila Cero” and consisted of allowing people to enter the events for free in order to report higher sales.

This strategy can be seen in cases throughout the region. A network made up of Argentine and Colombian nationals that trafficked cocaine from Paraguay and Bolivia to Argentina and then shipped it to Europe was dismantled in November 2023. The network laundered money through concerts held in theaters they owned. Authorities caught on because the group was paying artists three to four times more than elsewhere, which allowed them to report higher-than-actual legal expenses.

This article, written by Sara Garcia, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

The US Embassy is inviting US citizens to attend a town hall meeting in Medellin on Thursday, February 29, 2024, from 6:00 to 7:00 p.m.  The Consul General and the American Citizens Services Chief will provide an overview of consular services for US citizens in Colombia, discuss recent security alerts, share information on how to vote absentee, and conduct a Q&A session.

This Town Hall event is limited to US citizens and parents of minor US citizens.

Please note that this event is a meeting only.  Embassy staff will not be accepting passport applications, Consular Report of Birth Abroad application, providing notarial services, nor answering questions pertaining to US visa applications.  For information on how to apply for consular services please visit https://co.usembassy.gov/ and select the service you seek from the menu.

All attendees must register by February 26, 2024, at: https://forms.office.com/g/JKK8Bh2Q6i .  Upon registration the Embassy will send further details including the venue address.  This Town Hall event is limited to US citizens and parents of minor US citizens.  The Town Hall will be conducted in English.

All attendees must register by February 26, 2024

Last Friday, Aerocivil, Colombia’s civil aviation regulator approved the request of Emirates airline for authorization as a foreign operator to operate international regular public transport air services on international routes to and from Colombia, between cities. from Dubai (UAE) and Bogotá, with a stopover in the city of Miami (USA).

The approval contemplates the start of regular daily passenger operations between Dubai and Bogotá, through Miami beginning June 3, 2024. The flights will be operated with Boeing 777-200LR and 777-300ER aircraft with the capacity to transport up to 354 passengers in a three-class configuration, and 14 tons of cargo on each flight.

According to the airline’s study presented to Aerocivil, Colombia represents a significant and growing demand for air travel to and from the United Arab Emirates and the Arab world. Emirates also will enable significant connectivity between Colombia, Africa and Asia through Dubai.

Avianca’s complaints

What made a routine approval more interesting was the reaction of the dominant carrier in Colombia’s market, Avianca who publicly complained that “Emirates just wants to exploit mature markets” and threatened that hundreds of jobs would be put at risk. Interesting assertions, as Avianca does not fly to Dubai or other nearby destinations.

Avianca, the airline that sought to dominate slots in Bogotá’s El Dorado International airport through its purchase of low cost carrier Viva (which later collapsed under Avianca’s ownership), accused Emirates of not respecting principles of equity, opportunity, and reciprocity, and invited Aerocivil to “evaluate these precedents.”

Emirates invited Avianca to establish a route to and from Dubai, and to “not be short sighted because borders are ending.”

The Minister of Transportation William Camargo Triana assured that “The arrival of Emirates to Colombia marks a historic milestone in our air connectivity and strengthens commercial and cultural ties with the Arab world. This alliance will enhance tourism, trade and investment, promoting the country’s economic development and consolidating our position as a global destination. “We are committed to continuing to promote initiatives that promote the growth and international integration of Colombia.”

For his part, the General Director of Civil Aeronautics, Sergio París, pointed out that: “In the field of international relations, Colombia opens paths towards new scenarios of collaboration and understanding. Today, we are pleased with the establishment of an air connection with the vibrant city of Dubai, which marks not only a link between destinations, but also symbolizes our nation’s firm commitment to global integration. “The Arab nations are witnesses of a prosperous and diverse Colombia, prepared to cultivate ties of friendship, tourism and trade that transcend geographical borders, contributing to the construction of a more connected world.”

The approval of the request is under the auspices of “the fifth freedom of the air,” through the United States, a commercial aviation principle consisting of the right to embark and disembark passengers, mail and cargo to or from third States.

 

Medellín recently took drastic measures to combat sexual exploitation of minors by issuing a curfew that restricts anyone under the age of 18 from entering certain high-profile areas between 7 pm and 5 am. The measure was announced last month and went into effect on January 31 in Colombia’s second-largest city.

The edict was issued during the first month in office of newly elected Mayor Federico “Fico” Gutierrez, who previously served as the city’s mayor from 2016-2019, and applies to the following areas:

  • Parque Lleras and surrounding streets
  • La 33 (including Calle 37 between Carreras 43a and 54, and between the Autopista and Carrera 80 in both directions)
  • La Candelaria (from Calle Colombia to Rojas Pinilla, between Calle Bolivar and Calle Cúcuta, including Plaza de Botero and Parroquia de la Veracruz)
  • Corredor de la 70 (from Carrera 70 to Carrera 68a, between Calle 47d and Circular 1).

The time and location restriction only applies to unaccompanied minors. Children are permitted if they are with a parent.

Medellín has increased its efforts to combat this scourge and spread awareness in recent years. Signage announcing zero-tolerance policies for this grave crime can be seen on the windows or doors of many hotel and hostels, especially in the tourism and foreign resident hotspot of El Poblado.

Parque Lleras, one of the restricted areas, is in neighborhood’s nightlife zone and well known as a center for soliciting prostitution. The increase of sex tourism, and major presence of foreigners in general, in Poblado has led to a growing, visible backlash in recent years by locals who point to what they see as some downsides to Colombia’s big uptick in international tourism in recent years.

(Photo credit: ProColombia)

Lynx Air, Arajet, and JetSmart has been identified as having the newest aircraft fleets in the Americas, according to a recent report analyzing carriers across the globe.

Coming in as the youngest of all, per industry analysis and news firm CH Aviation, is Canadian carrier Lynx Air, with an average aircraft age of just 2.81. Dominican low-cost startup Arajet is close behind at 2.93 years old, while Chilean low-cost airline JetSmart ranked third with an average age of 3.01 years old.

Globally, only Starlux Airlines beat out the top two carriers in the Americas, with an average fleet age of just 2.04 years old.

“Our fleet, besides being among the most modern in the world, is also the most efficient and environmentally friendly fleet — thanks to the technology used by the Boeing 737 Max 8 that consumes less fuel and produces less sonic pollution than other aircrafts of its style,” said Victor Pacheco, CEO and founder of Arajet, in a release about the report.

Both Arajet and JetSmart have been working to increase their presence in Colombia over the past year.

Beyond their general growth trajectories in the region, executives for both airlines have noted that the exit of VivaAir and Ultra in 2023 left a void in the Colombian market — and created an opportunity for new entrants to service passengers who struggle to pay the higher fares demanded by market-dominant global carriers Avianca and LATAM Airlines.

READ MORE: The Low-Cost Carrier Model Is Here to Stay in Latin America

“The failure of Viva and Ultra is not the model, it was more the circumstances,” said airline industry veteran Frederik Jacobsen in an interview with Finance Colombia last year.

“Latin America needs low-cost airlines, because air transportation is a public service, and Latin Americans need to travel,” he added. “It’s a very vast continent separated by jungles and mountains with very poor road systems still. Aviation is fundamental for the development of Latin America, and the only way to get those people on board is by offering low fares.”

For the second time in just over a year, the body of a Colombian woman was found in a suitcase and the primary suspect is again a foreigner from North America. 

The victim, Laura Lopera, was found in an apartment in the Comuna 8 neighborhood of Medellín, according to authorities who issued an arrest warrant for still-at-large Canadian suspect Jesse Wiseman. The two reportedly first met online near the end of 2023 and had been seen together publicly in establishments in the El Poblado neighborhood of the city and other areas of the Aburrá Valley.

Wiseman is believed to have left the country through the local international airport in nearby Rionegro, and it has been reported that Colombian authorities have collaborated with Interpol to assist with conducting the search.

“Indeed, this subject left Medellin on February 9,” said Yiri Milena Amado, director of the prosecutor’s office in Medellin, in an interview with local newspaper El Tiempo. “He is already being traced in order to locate him. What is initially known is that he left for a Central American country, but it seems that he is moving to another country in Europe.”

The killing has caused outrage in the country and drawn comparisons to last year’s murder of Valentina Trespalacios, whose dismembered body was discovered in Bogotá in similarly grisly circumstances.

John Poulos, a U.S. citizen who reportedly began dating the deceased after they met on Tinder in 2022, has been held in a Colombian prison since he was arrested in Panama after fleeing the country and is currently facing trial for the murder of Trespalacios. If convicted, he could be sentenced to 50 years in prison.

Covered in this podcast of Colombia Business News Recap with Loren Moss https://lorenmoss.com/ brought to you by Finance Colombia https://www.financecolombia.com/

Click on the image above to watch the video.

Don’t forget! Come meet the team and me at the March 7 AI/ChatGPT Happy Hour at the Marquee Hotel in Medellín.

Thursday March 7 2024 Rooftop, Marquee Hotel Medellín 5:30pm Cash Bar

Thursday March 7 2024 Rooftop, Marquee Hotel Medellín 5:30pm Cash Bar

Disclosure: As mentioned, the presenter is long on Collective. Collective is not a sponsor of Finance Colombia or this podcast.

German digital services provider GFT Technologies recently acquired Sophos Solutions, a Colombian firm that provides IT and other services to the banking sector, from US private equity investment firm Advent International.

“In this strategic acquisition, we’re not just merging companies — we’re multiplying potential.”

– Marika Lulay, CEO of GFT

This marks the largest-ever acquisition for the Stuttgart, Germany-based firm in terms of headcount, and GFT stated in an announcement that its main objective was to expand its banking expertise, customer base, and geographical reach in Latin America.

The acquisition adds some 1,700 workers from Sophos to the more than 10,000 employed by GFT.

Sophos Solutions, which had revenues of more than 250 billion Colombian pesos in 2022 and maintains clients and partners that include “Colombia’s most relevant financial institutions,” per GFT, will add to the regional presence the company already has in Brazil, Mexico, Chile, Panama, and Costa Rica.

“In this strategic acquisition,” said GFT CEO Marika Lulay, “we’re not just merging companies — we’re multiplying potential. It is a logical continuation of our successful strategy for growth and profitability. All aspects of Sophos are highly valuable to us. From the new colleagues, new competencies. and new clients to the new partners for core banking solutions, such as Finastra.

“All this results in high traction for GFT in Latin America’s third-largest market, Colombia, plus exponential growth scope in the Americas and beyond,” added the chief executive.

Miami-based window and glass manufacturer Tecnoglass, Inc. (NYSE: TGLS) announced it will release financial results for both the fourth quarter of 2023 and and full year 2023 after market close on February 29.

The publication of the results will be followed by a webcast and conference call with management on March 1 at 8:30 a.m. (US Eastern Time) to add additional context and commentary.

The company provided the following details about how to access the call:

“To listen to the call and view the slides [online], please visit the ‘Investors section’ of Tecnoglass’ website. Please go to the website at least 15 minutes early to register, download and install any necessary audio software.

For those unable to access the webcast, the conference call will be accessible by dialing 1-877-269-7751 (domestic) or 1-201-389-0908 (international). Upon dialing in, please request to join the Tecnoglass Fourth Quarter 2023 Earnings Conference Call.

To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and enter pass code 13744034. The playback can be accessed until June 1, 2024.”

(Photo credit: Tecnoglass)

Colombia’s GDP rose by 0.3% in the fourth quarter, per the National Administrative Department of Statistics (DANE), which was slightly below the 0.4% expectation, and led to a full-year 2023 number of 0.6%. This, again, is lower than the 0.9% that was anticipated by some analysts.

Quarter-over-quarter, the main laggards were construction (-1.6%), commerce (-2.3%), and industrial manufacturing (-4.8%). There was an identical picture on a full-year basis for these sectors, as they dropped in 2023 by 4.2%, 2.8%, and 3.5%, respectively.

To the upside, the finance sector was the highlight ,with a quarter-over-quarter increase of 4.7% and year-over-year jump of 7.9%.

The numbers will be a disappointment — especially as they are so overshadowed by the 2022 reading of 7.3%.

However, they won’t be a shock to anybody.

The global economy has been struggling to shrug off inflation worries for well over a year, with respite only just arriving, and this has led to many central banks maintaining overnight rates at higher-than-ideal levels.

Colombia’s Banco de la República is no exception — and while its stubbornness in reducing rates can hardly be seen as responsible for the fourth quarter performance, the first quarter of 2024 recovery is likely to be modest. And that is in large part due to the committee’s refusal to lower rates until December.

As stated before, if you don’t believe the Ministry of Finance then you need simply listen to ANDI and Asobancaria, just two of the private sector federations that have pointed the finger at Leonardo Villar and the other central bank committee members.

We will see how 2024 develops. But there are some shoots of optimism.

January inflation was lower than expected, and the latest consumer confidence reading from Fedesarrollo was a step in the right direction. On the other hand, Camacol Colombia has also reported that home sales dropped 32.3% for the same month — although December construction licenses rose 28.5% year-over-year and were the highest for that month since 2019. Signals remain mixed overall.

Unfortunately, the central bank will be sitting on their hands this month (due to the upcoming meeting not including a rate decision) when they should be cutting rates by 50 basis points.

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out

Sign up for the Finance Colombia Newsletter

Contact Us

Copyright 2014-2023 Finance Colombia All Rights Reserved. We may earn commissions from qualifying purchases.