Venezuela Investigates Largest Private Bank in Cross-Border Currency Crackdown

Venezuelan authorities have launched a probe into Colombian private bank Banesco as part of an operation targeting currency exchange and speculation networks on the border with Colombia.

In recent days, police have arrested 105 suspects and frozen about US$4 million in bank deposits as part of the ongoing investigation. 

Venezuelan Vice President Tareck El Aissami announced that 1,133 bank accounts had been frozen in 19 banks, belonging to people linked with the illegal trade in bolivares – Venezuela’s national currency – who buy and sell on the border with Colombia. 

Banesco, Venezuela’s biggest private bank, held about 90 percent of this money and is now the subject of a formal investigation by authorities into their potential complicity in illicit currency exchange networks.

El Aissami also accused Colombia’s government of protecting the “mafia” organizations trafficking bolivares, which affects the availability of cash within the country, in an attempt to “destabilize and boycott the Venezuelan economy” in order to topple President Nicolas Maduro.

“All these corruption networks linked to the exchange mafias have – and we denounce it as it is – the support and protection of Juan Manuel Santos’ Colombian government,” El Aissami said on state television.

As part of the so-called Paper Hands Operation, the vice president also reported that 595 firms had been investigated, with 22 vehicles and properties seized by anti-corruption police. A further 112 arrest warrants have been issued.

Venezuela has suffered from chronic cash shortages in its banking system in recent months and plans to re-launch its national currency in June, removing three zeros from its denominations.

Venezuela has for years been battling the money mafias which operate along the border in order to circumvent exchange controls established by the Bolivarian government, demanding the Colombian government cooperate in controlling the illegal operations but with little success.

Among those arrested are several Colombian citizens, at least 31 of whom are linked to Carlos Colmenares, who was arrested on Thursday on suspicion of running websites artificially setting the price of the “black dollar”, allegedly causing speculation and financial disruption.

According to El Aissami, such websites aim to secure “the imposition of criminal rates of the speculative dollar.” Authorities claim portals price currencies up to 12 times above Venezuela’s official quota, contributing to the artificial devaluation of the national currency and high inflation levels.

El Aissami added that the alleged criminal groups arrested during this operation were centered in the states of Zulia, Tachira, Merida and Apure, all on or close to the Colombia border.

So far, neither Colombian authorities nor Banesco have issued public statements regarding the accusations.