A group of Guatemalan companies with family ties dedicated to the export of forest products (including wood) to countries with alerts of illegal trafficking of wild species caught the attention of local and international authorities, as they reported sales growth of up to triple digits in a fiscal year.
According to information in the file “Money laundering related to forest products marketing companies”, of the Latin American Financial Action Group (Gafilat) for Guatemala, an amount involved of US$5 million 950 thousand was detected, equivalent to regarding Q46 million and which is part of the report Regional typologies 2021-2022 in which, specialists from the financial intelligence units (FIU) of Latin America presented several cases and their support to counteract and pursue them.
One of the characteristics observed was the use of “data mining” tools to identify information that transactions provided to several forestry companies with atypical performance in their management, and the alerts for the record of sending and receiving international transfers to countries of risk of illegal trafficking of wild species, such as the People’s Republic of China and Singapore to which alleged sales abroad were reported.
The Gafilat report suggests that this typology might be related to the creation of front or fictitious companies in the countries of origin and destination of illegal products, since some of the companies registered in Guatemala that carried out the shipments were deactivated for not reporting. movements in their books in the following years, in order to lose track. The determining crimes are environmental and as violated sectors, a banking entity.
By using “data science” it was possible to determine inconsistencies between the amount of the operations carried out, with the approximate monthly income and expenses indicated by those involved, when starting the relationship with the obligated subject.
Furthermore, it was determined that the companies involved are related to each other due to the relationship between their legal representatives, apart from the fact that two of them have the same accountant registered.
Other indications
The Gafilat report details the existence of multiple cash deposits that were made for amounts less than US$10,000 to avoid filling out the form to record the transactions required by law.
There are also payments through checks cashed in cash for smaller amounts and in the name of different beneficiaries, as well as the receipt of multiple international transfers with the same characteristics.
In addition, the Superintendence of Tax Administration (SAT) provided information that the “company 1”, It actually registered exports to countries with risk of illegal wildlife trafficking for an amount greater than that observed in the transactional analysis, but the international transfers received totaled less than the agreed sale.
Likewise, he reported that the “company 2” recorded exports lower than the amount received, while international transfers recorded orders from legal entities – companies – whose commercial name does not coincide with those of the clients to whom, supposedly, the wood was shipped from Guatemala.
Also drawing attention was the existence of a registration process for forest products marketing companies every year and their inactivation every three years, precisely when the legal deadline to renew the license issued by the National Forest Institute (Inab) is met.
In summary, the report specifies that the “company 1” y “company 2” They showed year-on-year sales growth above the average of other companies established in the market and with a track record. For example, the “company 1” had a growth in sales abroad from one year to the next of 500% and in the same way the “company 2” recorded a 300% sales increase in one fiscal year.
The “company 1” and their legal representative had reports of suspicious transactions (RTS) for making multiple cash deposits for amounts less than US$10 thousand -Q78 thousand- and at the same time constant expenditures with payment of checks cashed in cash by different beneficiaries and for much smaller amounts .
Then, by applying “data mining” it was possible to generate “a network analysis model” with which it was possible to link the relationship between “company 1” y “company 2”, for the identification of transactions related to personal accounts of the legal representative of the “company 2”.
The representative’s profile
Then it was determined that the legal representative of the “company 2”, At the age of 23 in 2018, in the form for starting relations with the entity, she mentioned monthly income of US$385, established a monetary account for her management as the owner of an individual timber marketing firm, and registered a close relative as an additional signatory.
In the following 90 days, described in the case, the monetary account recorded credit operations for more than US$256,500 -regarding Q2 million- of transfers coming mostly from the United States, as well as transfers from the “company 1”; and in turn expenditures through check payments to various beneficiaries.
The “company 1”, It was registered in 2016 with the National Forest Registry (RNF) but was deregistered in 2018; and in that year the “company 2”, for the commercial purposes of “processing, purchase, sale, export, import of all types of legally traded wood.”
The others “company 3”, and “company 4”, of the conglomerate, were formed with legal representatives with apparent kinship, in 2019 and 2020, since the surnames match those of the people involved in the RTS who were previously identified.
They no longer exported, but they received funds
When making the comparative analysis of international transfers in the name of the identified individuals and legal entities and those related to the “company 1” y “company 2”, It was observed that, in the case of the “company 1”, The flows perceived in transfers were lower than the reported exports, which is an inconsistency.
In addition to “company 1”, It registered in 2016 with the RNF, worked for three years and showed favorable sales growth, but closed operations in 2019 and no longer renewed its license. The “company 2”, When making the comparison, it was determined that it was registered in the RNF in 2018, and registered exports in 2018 and 2019 to China and Singapore for US$657,956 -regarding Q5 million- and the amount of transfers received was US$2.13 million -regarding Q16 million-.
Despite not registering export shipments from 2020 to 2022, I continue to receive international transfers for a total of US$3.79 million -regarding Q29 million-, without having any economic or legal basis.
Finally, it was possible to identify that in the international transfers the ordering parties were legal entities whose commercial name does not coincide with those of the clients to whom the wood would have been shipped.
The creation of shell companies
The Gafilat report specifies that it was possible to identify that companies dedicated to forestry activities began operations consecutively each year and deactivated them three years later.
In 2014 they began operations with the “company 5”, but in 2016 it was already listed as inactive before the Inab. In 2015 the “company 6” with the same legal representative and in 2017 it stopped operating.
It is mentioned that the legal representative of “company 5” y “company 6”, It is linked to a process initiated by the Public Ministry, but under the crime of collection, use and commercialization of forest products without documentation.
One of the conclusions of the research is that the vulnerability to the exploitation and trade of forest species is evident, with the constitution of companies with apparent commercial activity that facilitate the introduction of funds of illicit origin to the financial system, and that directly affects the development and sustainability of the country in environmental and economic matters.
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