Illegal gold has overtaken cocaine as the main source of income for organized crime in Colombia. Recent cases in Colombia, Peru and Ecuador show why knowing your customer is no longer enough.

On August 23, 2026, Colombian President Abelardo de la Espriella filed a criminal complaint against C.I. Meprecol, a state-run gold trading company that alleges that the company may have bought and exported gold of illegal origin. According to an internal forensic audit cited in the complaint, Meprecol had no documented traceability for the gold it bought and no records showing the metal ever reached its facilities in Medellín or Bogotá. The case is currently with the Attorney General’s office.

A regional crackdown on criminal gold

The Meprecol case is part of a wider pattern. Across the region, governments are cracking down on  the financial side of illegal mining, not only the mine sites.

In Peru, illegal mining accounted for 55% of the total value flagged in financial intelligence reports between January 2015 and July 2025, according to the country’s Financial Intelligence Unit. In August, the Mining Ministry announced a new strategy centered on traceability and oversight of gold processing plants. The tax authority is also targeting plants suspected of turning illegal gold into formal product. Weeks earlier, authorities seized a 5.31 kg gold bar worth more than USD 600,000 that was allegedly bound for India.

In Ecuador, the government says its operations between January and September 10 dismantled 1,119 illegal mining camps and put almost 600 excavators out of action. It estimates the total economic hit to criminal groups at USD 4.66 billion. Investigators are also looking into possible money laundering linked to a former mayor of one of the country’s main gold districts.

INTERPOL’s Operation Guyana Shield which included  Brazil, French Guiana, Guyana and Suriname resulted in 198 arrests. Among them was the detainment of three men carrying USD 590,000 in cash who were suspected of gold smuggling and money laundering, with possible links to a major Guyanese gold exporter. INTERPOL Secretary General Valdecy Urquiza called illegal gold mining “the fastest-growing revenue stream for organized crime groups, including in Latin America.”

Why gold has overtaken cocaine

Gold has traded above USD 4,000 an ounce since late 2025. Meanwhile, cocaine prices in Europe have fallen by as much as 50%. Illegal gold now earns criminal groups in Colombia and Peru more than cocaine does.

Risk also favors gold. Cocaine is illegal wherever it goes. Gold is a legal product: once it has export papers, it moves through the same ports, customs systems and banks as any other commodity. “We’re talking billions and billions of dollars a year in dirty money,” Julia Yansura of the FACT Coalition told Business Insider, referring to illegal gold reaching the U.S. market.

Of Colombia’s roughly USD 4.1 billion in gold exports in 2024, about USD 1.5 billion went to the United States. In April, The New York Times reported that gold from La Mandinga, a mine run by the Clan del Golfo partly inside a Colombian army base, had reached the U.S. Mint through certification chains that looked legitimate. The Treasury opened an investigation and tightened its sourcing standards.

How illegal gold becomes clean

Illegal gold usually becomes legitimate in five stages:

1. Extraction. Armed groups control remote mining sites. Workers are paid in cash, and nothing is recorded.
2. Concealment. Illegal ore is mixed with legal production. Export documents are forged, and fake royalty payments create a clean paper trail.
3. Movement. The gold crosses poorly watched borders and is smelted. After smelting, its origin can no longer be traced.
4. Integration. Front companies such as traders, exporters and jewelers issue invoices to justify its value. Trade-based money laundering appears in close to half of documented schemes.
5. Clean assets. Proceeds go into real estate, luxury goods and legitimate businesses. More and more of the rest moves through crypto and stablecoins.

The refinery is the key control point. An estimated 80% of illegal gold passes through a recognized refinery before it enters the legitimate market. Before smelting, origin can still be checked. After smelting, compliance teams are relying on paperwork, and the Meprecol case shows how weak that paperwork can be.

Why KYC is not enough

KYC answers one question: who is my customer? A gold exporter can pass every check on incorporation, beneficial owners, directors and sanctions and still sell metal pulled from a riverbank held by an armed group.

Many financial institutions are not set up to catch this. A March 2026 survey by WWF and Themis of 647 financial institution professionals in 22 countries found that:

• 84% operate in at least one area at high risk for illegal mining.
• 40% of those with high-risk sector exposure do not screen for it.
• More than 40% have no internal policies or training on environmental crime.

Respondents ranked trade finance as the highest-risk activity. South American lenders reported the lowest levels of training and policy adoption. The full report is useful reading for any compliance team with exposure to the region.

Policy is starting to change as well. The FACT Coalition has urged Washington to treat illegal gold mining as a predicate offense for money laundering. It has also called for gold to fall under the same USD 10,000 cross-border reporting threshold that applies to cash. The trend is clear: supervisors increasingly expect firms to understand both who they deal with and what those counterparties are selling.

What “Know Your Source” looks like in practice

Know Your Source (KYS) builds supply chain due diligence into the AML program. For banks, refiners, traders and anyone financing or handling gold from the region, it means:

• Tracing the chain back to the mine. Identify every intermediary between the extraction site and your counterparty. Informal traders and cooperatives are where illegal gold usually gets mixed in. In the Meprecol case, cooperatives were at the center of the allegations.
• Checking volumes against physical capacity. Compare what a supplier exports with what its declared mining titles can produce, using concession records, royalty filings and satellite imagery. Volumes above capacity are one of the clearest warning signs.
• Watching for known red flags. These include recently formed exporters with large volumes, heavy use of cash, prices below market, routing through unrelated third countries, and the same beneficial owner on both sides of a trade.
• Treating gold trade finance as a monitoring priority. Test invoices against market prices, declared weights and logistics routes. Mis-invoicing is one of the main ways gold value is moved.
• Using recognized frameworks. The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals and the LBMA Responsible Gold Guidance, whose version 10 is under public consultation, give a risk-based structure that regulators and counterparties already recognize.
• Checking the digital exit. Where proceeds are converted into crypto or stablecoins, on-chain analytics should be part of enhanced due diligence.

The bottom line

For risk management teams, knowing the customer is no longer enough. Institutions that can show where their metal came from will be much better placed when regulators, auditors or journalists start asking.

Integro Advisers helps financial institutions and multinational companies design risk-based AML/CFT programs, including supply chain and source-of-funds due diligence for high-risk commodities.