Unveiling the Historical Presence of Colombian Cartels in Offshore Tax Havens
Abstract
This thesis explores the connections between Colombian drug cartels and tax havens, focusing on how these organizations uses offshore financial centers to launder illicit profits and evade detection. Despite extensive political efforts to combat drug trafficking, cartels continue to thrive, with cocaine cultivation reaching unprecedented levels in recent years. An important aspect of cartel operations involves the exploitation of tax havens for money laundering and the concealment of illicit wealth. By employing data from the ICIJ Offshore Leaks Database, this research explores the ties between Colombian cartels and offshore tax havens, as well as the development of these connections over time. Through a combination of scraping cartel affiliated surnames, geospatial techniques, and longitudinal analysis, we obtain and analyze data revealing the historical and evolving ties between Colombian cartels and tax havens.
Our main findings reveal that Colombian cartels predominantly operate through key tax haven cities in the Caribbean, with a significant geospatial clustering in Aruba. We find evidence demonstrating that overall tax haven activity coincides with the developments in cocaine cultivation and proximity to Caribbean hotspots. In contrast, we find that tax haven activity tends to be unaffected by an increase in US narcotics and security aid. Despite increased distinctive family ties to tax havens outside the Caribbean, we find that the Caribbean remain the centerpiece for financial ties between Colombian cartels and offshore havens. These findings implicate that the cartels´ money laundering-operations in tax havens are little affected by political aid, and that the overall activity in key financial hotspots is reliant on the state of cocaine cultivation.
Despite shortcomings to our study, we find the main results to be robust. By assessing similarity and performance metrics, we verify the existence of cartel ties in the data, and find that the framework used for statistical inference performs consistently on key performance metrics.
Keywords – Colombian Cartels, Tax Havens, Money Laundering, Offshore Leaks This thesis explores the connections between Colombian drug cartels and tax havens, focusing on how these organizations uses offshore financial centers to launder illicit profits and evade detection. Despite extensive political efforts to combat drug trafficking, cartels continue to thrive, with cocaine cultivation reaching unprecedented levels in recent years. An important aspect of cartel operations involves the exploitation of tax havens for money laundering and the concealment of illicit wealth. By employing data from the ICIJ Offshore Leaks Database, this research explores the ties between Colombian cartels and offshore tax havens, as well as the development of these connections over time. Through a combination of scraping cartel affiliated surnames, geospatial techniques, and longitudinal analysis, we obtain and analyze data revealing the historical and evolving ties between Colombian cartels and tax havens.
Our main findings reveal that Colombian cartels predominantly operate through key tax haven cities in the Caribbean, with a significant geospatial clustering in Aruba. We find evidence demonstrating that overall tax haven activity coincides with the developments in cocaine cultivation and proximity to Caribbean hotspots. In contrast, we find that tax haven activity tends to be unaffected by an increase in US narcotics and security aid. Despite increased distinctive family ties to tax havens outside the Caribbean, we find that the Caribbean remain the centerpiece for financial ties between Colombian cartels and offshore havens. These findings implicate that the cartels´ money laundering-operations in tax havens are little affected by political aid, and that the overall activity in key financial hotspots is reliant on the state of cocaine cultivation.
Despite shortcomings to our study, we find the main results to be robust. By assessing similarity and performance metrics, we verify the existence of cartel ties in the data, and find that the framework used for statistical inference performs consistently on key performance metrics.
Keywords – Colombian Cartels, Tax Havens, Money Laundering, Offshore Leaks