Illegal Gold Finances Latin America’s Dictators & Cartels. The United States Must Lead the Fight Against It.

Latin America’s criminal organizations used to make most of their billions trafficking drugs. But now, in Colombia, Peru, the Brazilian Amazon, and elsewhere across the region, they earn even more from illegal gold.

Colombia’s criminal groups make over half their revenue from illegal gold mining. Both Venezuela’s Nicolás Maduro and Nicaragua’s Daniel Ortega use illegal gold mining operations to buy the loyalty of top military brass. Illegal mining drives deforestation of the Amazon. In all these ways and more, the booming illegal gold trade threatens U.S. national security.

The United States has taken some steps to curb the trade, but not nearly enough. U.S. metal companies have purchased billions of dollars-worth of illegally mined Latin American gold over the past decade. The U.S. still imports most of the gold mined in authoritarian Nicaragua. And earnings from environmental crime in Latin America, including illegal mining, frequently end up in U.S. shell companies.

What caused the illegal gold boom, why does it threaten U.S. national security interests, and how can the country lead the fight against the trade? Read on. 

Criminal Gold Rush 

When global political and financial uncertainty rises, investors and central banks buy safe haven assets like gold, driving up prices. In the wake of the 2007-8 financial crisis, rising U.S.-China competition, and Russia’s war on Ukraine, demand for gold surged and prices hit record highs. Today, they’re still rising. The price of an ounce of gold has increased nearly sevenfold over the past two decades.

Source: Bloomberg

The price hike triggered a gold rush in Latin America starting in the early 2010s. But whereas small informal “wildcat” miners reaped the benefits of previous gold rushes, powerful organized crime groups and hostile authoritarian regimes benefited most from this most recent one, effectively colonizing gold-rich regions and subjugating local miners. In illegal gold, criminal groups found a convenient means of laundering drug proceeds. Authoritarian regimes found a financial lifeline. 

Under their control, illegal mining has grown massively. Illegal gold now consistently outearns cocaine in Colombia and Peru, the world’s two top producers of the coca leaf. In 2024, illegal gold miners operating on a single Amazon River tributary at the Brazil-Colombia border generated more yearly revenue than the entire annual budget of Brazil’s federal anti-deforestation agency, according to Bram Ebus of International Crisis Group. In Colombia and Venezuela illegal miners extract more gold each year than legal mining companies.

Source: Ojo Público 

*2023 numbers in figure above are estimates. 

Illegal gold not only harms Latin America; it also undermines U.S. national security interests. It entrenches authoritarians aligned with U.S. geopolitical adversaries. It accelerates Amazon deforestation, contributing to climate change—the driver of deadly tropical storms battering the United States. And it strengthens drug trafficking groups as overdoses continue to claim around 100,000 U.S. lives each year. 

Gaining Momentum 

The United States has taken first steps toward addressing the challenge. In 2015, the Federal Bureau of Investigation (FBI) set up the Illegal Mining Initiative to investigate criminal groups involved in illegal mining and prosecute complicit companies. The Trump administration signed bilateral memoranda of understanding (MoU) with Peru and Colombia in 2017 and 2018, providing technical assistance to local law enforcement and supporting efforts to formalize small-scale miners and mitigate environmental harm. More recently, the Department of Justice prosecuted U.S.-based metal company NTR metals for importing billions in South American illegal gold, and the U.S. embassy in Lima warned companies against buying gold from illegal sources. And the Treasury Department in 2021 and 2024 published notices warning financial institutions to step up due diligence on financial flows involving environmental crime money. Treasury also partnered with Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname to set up the Amazon Region Initiative Against Illicit Finance to Combat Nature Crimes in 2024—a mechanism to strengthen regional financial intelligence units, share information among law enforcement, and conduct joint investigations into environmental crime.

Still, there is more the United States could do. Here are four steps for advancing the agenda: 

Pass the United States Legal Gold and Mining Partnership Act 

This bipartisan bill, reintroduced in March 2023 in the Senate by Senators Marco Rubio (R-FL) and Bob Menendez (D-NJ) and in the House in September 2023 by Representatives Cory Mills (R-FL) and Sydney Kamlager-Dove (D-CA), allocates $10 million for the development of a multi-year strategy to curtail illegal gold mining in the Western Hemisphere.

It authorizes the federal government to bolster the capacities of Latin American law enforcement and financial intelligence units; increase intelligence sharing on illegal gold; enhance regional efforts to tackle illicit gold-related money laundering; and strengthen due diligence, traceability, and transparency in gold supply chains. It also calls for stricter environmental and sustainability standards for legal mining companies, action to reduce mining in environmentally protected areas, and expanded pathways to formalization for artisanal and small-scale miners.

The bill would take what has been a well-intentioned but piecemeal approach to illegal gold and give it coherence. Lawmakers—particularly those on the House Committees on Foreign Affairs and Financial Services, which are currently eyeing the bill—should do what it takes to pass it. 

Sign MoUs with Brazil and Ecuador to Tackle Illegal Mining 

The United States should use the memoranda of understanding signed with Peru and Colombia in 2017 and 2018 as frameworks for similar MoUs with Brazil and Ecuador. The MoU between the United States and Peru helped launch Operation Mercury: a two-year Peruvian law enforcement operation that “led to near-universal abandonment of mining operations in targeted areas” of Madre de Díos, formerly one of South America’s biggest illegal gold mining hubs, according to international researchers. 

Under the MoU, the United States provided more than $50 million in assistance and equipment as well as operational support for Peruvian law enforcement. Peruvian authorities also increased social services in the area and created pathways for miners to formalize their activities, provided they accepted environmental and labor standards. Not only did mining subside; deforestation in Madre de Dios, part of the Peruvian Amazon, decreased by 90 percent. Although illegal mining resurged during the COVID-19 pandemic and political will in Lima to fight illegal mining has since diminished, Operation Mercury proves that with sufficient external support, regional partners can score big results. 

An MoU with Brazil, the third largest gold producer in Latin America, is long overdue. Brazilian President Luiz Inácio Lula da Silva (Lula) has already made curbing illegal gold a priority, reducing the number of illegal miners operating in the Yanomami indigenous reserve on the Venezuelan border by 80 percent and mining-related deforestation by 30 percent since he took office in 2022. Brazil’s indigenous affairs minister, Sonia Guajajara, has called for greater international support. There is ample room for cooperation. 

As for Ecuador—where criminal gangs profit not just from drug trafficking, but also mining gold—an MOU could be a game-changer. The United States should capitalize on Ecuador’s prudent decision to declare illegal mining a national security threat in January 2023 and provide the assistance, equipment, and operational support necessary to curb illegal mining and its profits.

Make Illegal Mining and Other Environmental Crimes Predicate Offenses for Money Laundering 

Contrary to international best practices, U.S. federal law does not include foreign environment crimes, like illegal mining, as predicate offenses for money laundering. That ties the hands of U.S. federal prosecutors when it comes to prosecuting Latin America’s illegal mining mafias and their launderers and enablers. Congress should update U.S. anti-money laundering legislation to make illegal mining and other environmental crimes predicate offenses. This would both allow the Department of Justice to use the same tools it uses against drug traffickers to go after illicit mining rings and require financial institutions to include environmental crimes in their anti-money laundering and due diligence strategies. 

Consider Tightening Sanctions on Nicaragua’s Gold Sector

On October 24, 2022, President Biden issued Executive Order 14088, giving Treasury the authority to sanction U.S. firms involved in Nicaragua’s gold sector, as well as similarly involved foreign firms that also maintain subsidiaries, assets, or property in the United States. That same year, Treasury sanctioned Nicaragua’s state mining authority (a regulatory agency), its director, and a state-owned mining company, in the latter’s case for “using gold revenue [] to oppress the people of Nicaragua.” In 2024, Treasury sanctioned two more regime-aligned mining companies. 

But these moves have been largely symbolic. The United States remains the primary destination for Nicaraguan gold, accounting for nearly $720 million of Nicaragua’s $1.13 billion in gold exports in 2023. And the sanctioned Nicaraguan mining companies account for less than one percent of mining concessions in Nicaragua. Meanwhile, foreign mining companies—which control over 60 percent of metallic mining concessions in Nicaragua—continue to operate freely, even as researchers allege they benefit from the regime’s land-grabbing from Indigenous and Afro-Nicaraguan communities (some foreign companies have denied this). 

The White House and Congress should consider doing more to curb the regime’s mining revenues. Representatives Christopher H. Smith (R-NJ) and Maria Elvira Salazar (R-FL) introduced the Restoring Sovereignty and Human Rights in Nicaragua Act of 2024 after a comparable bill passed the Senate Foreign Relations Committee with bipartisan support, which puts renewed emphasis on gold sanctions. The White House could also sanction additional mining companies.

Such steps would deal a substantial financial blow to the Ortega-Murillo regime. There are trade-offs to consider: broader sanctions could damage Nicaragua’s economy and might increase outmigration. They risk friction with Canada, given Canadian companies’ presence in the Nicaraguan gold sector. And the Ortega-Murillo regime could respond by increasing gold exports to China and other geopolitical rivals. Still, given gold’s financial importance to the regime, a more aggressive approach is worth weighing.

These are the building blocks for a strategy against criminal and authoritarian gold mining. Until the United States leads on the issue, illegal gold will continue destabilizing the Americas.