Venezuelan Authorities Crack Down on Currency Fraud

Venezuelan authorities have intensified the battle against foreign currency fraud as part of strategies to defend the country’s foreign currency reserves against an “economic war” being waged against the government.


The state maintains controls on the exchange of bolivars into foreign currency in order to prevent capital flight. Citizens and businesses receive dollar allocations from the state’s exchange commission Cadivi at the official rate of 6.3 Bsf = US $1 for a range of purposes such as foreign travel and goods imports.

Recently authorities have increased efforts to prevent the fraudulent claim and use of state-granted dollars, which contribute to pressures to devalue the bolivar and hurt the Venezuelan economy.

Last week six motorsport drivers were arrested for allegedly defrauding the Venezuelan state of US $60 million in fraudulent foreign currency requests.

The alleged scam was first denounced by Sport Minister Alejandra Benitez after discovering that certain “well known” motorsport drivers were involved in forging her signature as part of fraudulent dollar requests.

The scam included using made-up press reports with false details of race finishes and prizes won in order to be able to claim more foreign currency.

In an interview with local newspaper Panorama last Sunday, Justice Minister Miguel Rodriguez Torres confirmed that the six unnamed drivers would face trial for the accusations. “They did it with the prices of races, false trophies, inflated [dollar] requests…we checked over them, now we’ll check if they made any other requests,” he said.

The minister also reported that three other individuals had been arrested for another foreign currency scam. Those involved allegedly requested dollars to import medical equipment, however then only imported the outer covers of the equipment and kept the dollars for themselves.

Further, the president of Cadivi, Jose Khan, informed press this week that around 400 – 500 companies have been discovered with “irregularities” in their requests for dollar allocations, which are being investigated. According to statements by former Central Bank president Edmee Benacourt in May, around US $20 billion were granted last year to “companies on paper” that misused the currency grants.

As a result of these investigations Minister Rodriguez Torres has called on authorities to improve monitoring and control of the use of dollar grants in order to prevent misuse of the country’s foreign currency earnings.

The minister also argued that organized mafias are working to drain the economy of foreign currency as part of an “economic war” by political and economic actors opposed to the Bolivarian revolution.


In recent weeks the government has implemented a variety of measures to better protect the use of foreign currency in the economy.

“We will optimize the use of foreign currency because it belongs to the people. It’s not for acquiring things that aren’t a priority for our needs,” said Vice Minister for the Economic Area, Rafael Ramirez, while announcing new currency measures earlier this month.

New controls have been introduced in airports to avoid currency mafias taking part in a “currency tourism” scam where a single traveler uses several people’s credit cards to receive multiple dollar allocations in cash abroad, to then be sold Venezuela on the parallel, more lucrative, dollar market.

A parliamentary reform is also being discussed to the Law Against Illicit Currency Exchange, which would increase penalties for those taking part in currency fraud.

To satisfy foreign currency demand for legitimate personal and business interests the Venezuelan Central Bank is also pumping an extra $900 million into the economy through an auction system.

However authorities argue that the design and implementation of necessary measures to combat the “economic war” and currency fraud require that President Nicolas Maduro be granted special constitutional law-making powers, called the Enabling Law.

“There is a large section of the private sector that uses foreign currency not for investment, but rather to apply damaging elements [to the economy] such as hoarding, speculation and excessive usury that maintain the economy distorted,” said socialist lawmaker Julio Chavez to public channel VTV on Tuesday.

“Due to this the pertinence of the Enabling Law, to apply far more severe controls against the [abuse of] Cadivi dollar grants,” the pro-government legislator explained.

In anticipation of this, Vice President for the Economic Area Rafael Ramirez, Finance Minister Nelson Merentes, and the Venezuelan Central Bank are currently designing a new set of policies to combat fraudulent use of foreign currency grants.

Original article from Correo del Orinoco International. Additional editing and reporting by