Peru’s securities regulator suspends Stanford Bank’s activities for 30 days

Peru’s securities and exchange regulator, Conasev, has suspended the operations of Stanford International Bank’s local Lima unit for 30 days, pending an investigation into whether the firm was involved in a money-laundering scheme tied to Mexico’s drug cartels.

Following the accusation Thursday in the United States by the US Securities and Exchange Commission that Texas-based financier Allen Stanford – president and principal shareholder of the Stanford Group companies – has committed massive and continuous fraud of $8 billion, the investigation in Peru is to determine whether the Stanford Group Peru SAB sold high-yield certificates of deposit without a license, and whether it has been involved in money-laundering activities tied to Mexican drug cartels.

Ecuador and Venezuela on Friday also suspended Stanford’ banking operations in their countries pending investigation. In the US, all Stanford’s assets have been frozen and the SEC’s civil suit includes two of Stanford’s colleagues and three of his other companies, while the FBI is following its own line of investigations

Given that Stanford’s Peru office – which has a net worth of approximately $2 million – worked as a broker-dealer, it is not yet clear whether Peruvian clients were sold the certificates at the core of the $8 billion scandal. Certificates of deposit with interest way over the market rate were sold by Stanford Bank from its branch in Antigua. The Stanford operations are based in Houston and Antigua, whose government gave Allen Stanford a knighthood and citizenship.

The investigation in Peru into possible money laundering is due to the fact that Mexican groups such as the Juarez, Sinaloa, Tijuana and Gulf cartels -once merely known as “mules” for Colombia’s indomitable cocaine cartels- have become significant players internationally, now bypassing the Colombians to buy cocaine directly from producers in countries such as Peru.

Though the Andean region remains the “production heartland” of cocaine, it is not home to all the major players in the trade. For several years there have been indications that rising Mexican cartels are overtaking Colombia as the primary movers of cocaine to North American and European markets.

According to daily La República, 80 percent of drug production in Peru is financed by Mexico’s “Aztec Mafias,” which are now occupying territories once controlled by the Colombian Cali and Medellín cartels.

Until 1996, Peru was the world’s largest coca leaf producer, but recently Colombia -which has always been the largest producer of the final product, cocaine- has taken the lead in world coca leaf cultivation.

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