Money laundry and hybrid scenario in Venezuela

Corruption in Venezuela is described by international watchdogs as endemic and on an industrial scale, severely worsening during the Chávez and Maduro regimes. Venezuela consistently ranks as one of the most corrupt countries globally.

Widespread Corruption

Systemic Mismanagement: Corruption permeates key state-owned enterprises, most notably Petróleos de Venezuela, S.A. (PDVSA), which controls the country's main source of revenue, oil. Schemes often involve bribes for contracts, bid rigging, and the siphoning off of billions of dollars.

Currency Manipulation: The state's control over the highly regulated foreign exchange market has created vast opportunities for fraud and kickbacks. Officials and connected businessmen—known as bolichicos or boliburguesía—have allegedly profited immensely by obtaining dollars at the artificially low official exchange rate and selling them at the much higher black-market rate.

Scale of Theft: Investigations in various countries have implicated Venezuelan officials and cronies in the theft and embezzlement of tens of billions of dollars from the Venezuelan public budget.

Illicit Proceeds: The profits from corruption, drug trafficking (Venezuela is described as a preferred route for cocaine destined for U.S. and European markets), and the illegal trade of commodities, particularly gold extracted through illegal mining, are primary sources of illicit funds.

Transnational Mechanisms: Corrupt actors utilize complex transnational schemes to move, store, and trade their illicit wealth abroad, making it difficult to trace. These often involve:

Shell Companies: Using layers of foreign-incorporated companies, often in jurisdictions considered tax havens, to hide the source, ownership, and control of illegal funds.

Proxies and Frontmen: Employing family members, associates, or front companies to act on their behalf.

Global Impact: The money laundering activities linked to Venezuela have an international reach, leading to numerous criminal investigations, charges, and asset seizures in the United States and European countries.

International Illegal Investments and Illicit Financial Flows

Venezuela's high levels of corruption and weak rule of law have created a permissive environment for illicit financial flows and related international criminal activities, rather than legitimate foreign investment.

Illicit Commodity Trade:

Gold: Illicitly-mined gold is a significant source of profit for criminal organizations and is used to finance the regime. Its origins are often disguised in the Caribbean, Latin America, the Middle East, and Africa before entering international markets.

Oil: Despite sanctions, oil continues to be a mechanism for fraud and corruption, with exports still reaching some countries, often through intermediaries or third countries to obscure its origin.

Tolerance of Criminal Organizations: U.S. agencies report that the regime tolerates and allows transnational criminal organizations (TCOs) and other illegal armed groups to operate and profit within Venezuelan territory, facilitating drug trafficking and other criminal enterprises.

I. Financing of Militias and Guerrilla Groups

The financing for Colectivos (pro-government, armed civil groups, often referred to as militias) and Colombian guerrilla groups like the ELN (National Liberation Army) and FARC dissidents operating in Venezuela comes from a combination of state support and organized crime.

A. Colombian Guerrilla Groups (ELN and FARC Dissidents)

These groups exploit Venezuela's permissive environment—particularly in border and mining regions—to finance their operations. Their main sources of income include:

Source of Financing	Mechanism in Venezuela
Illegal Mining	Primary Source: They control and operate illegal mines, especially for gold and coltan, in states like Bolívar and Amazonas. They reportedly profit from the extraction, transport, and export of these minerals, often in cooperation with corrupt state security forces.
Drug Trafficking	They use Venezuelan territory as a logistical base and transit route for cocaine, leveraging the corrupt state infrastructure to facilitate trafficking to international markets.
Extortion and Kidnapping	They use these methods to pressure local populations and businesses, particularly in border areas, generating illegal revenue.
Contraband/Smuggling	They control and profit from the illegal trade of goods, including subsidized Venezuelan fuel and food, across the border.

The relationship with the Venezuelan regime is symbiotic: the state allegedly grants these groups sanctuary and allows them to operate illegal businesses in exchange for them acting as irregular shock troops to suppress internal dissent and secure the border area.

B. Colectivos (Pro-Government Militias)

The Colectivos are groups of armed civilians who act in defense of the government, and their financing is often more direct:¹

• State Financing: These groups are reportedly financed by the state and have direct links with the police and intelligence agencies.

• Impunity and Extortion: Their official links provide them with total impunity, allowing them to engage in illicit activities, including local extortion, racketeering, and intimidation, with little fear of prosecution.

• Political Role: They are used by the regime for political control, intimidation of the opposition, and to maintain order in specific neighborhoods.

II. The Growth of Nicolás Maduro's Alleged Fortune

Investigations in foreign jurisdictions and reports by international organizations (like Transparency International) suggest that Nicolás Maduro's fortune and that of his inner circle have grown immensely through large-scale corruption and illicit schemes. This growth is a direct consequence of the issues outlined in your previous request (money laundering and corruption).

The main channels for the accumulation of this alleged wealth include:

Mechanism	Description
State Plunder and Embezzlement	Officials and their associates systematically siphoned off funds from state coffers, particularly through PDVSA and the state-controlled foreign exchange system. Schemes involve fraudulent import contracts, over-invoicing, and manipulating the difference between official and black-market exchange rates to multiply profits.
Narco-Terrorism Accusations	The U.S. Department of Justice has presented charges against Maduro and top officials, alleging their involvement in a "narco-terrorism partnership" with the FARC for over 20 years, accusing them of conspiring to traffic massive amounts of cocaine and using the state's infrastructure for the operations.
Illegal Gold Trade	Maduro's inner circle is accused of profiting directly from the illicit gold trade, which bypasses international sanctions and involves criminal organizations, generating untraceable cash flow.
Testaferros (Front Persons) and Laundering	The fortune is typically not held in Maduro's name but is hidden through an elaborate network of testaferros (like Alex Saab or Raúl Gorrín), shell companies, and offshore accounts in jurisdictions like Switzerland, Turkey, and the Caribbean.
Asset Seizures:	The magnitude of the wealth is partially evidenced by asset seizures in various countries, with reports indicating that goods linked to Venezuelan corruption (properties, jets, jewels) and the inner circle have been seized, valued at billions of dollars.

I. Hybrid Warfare in Venezuela

Hybrid Warfare refers to a military strategy that blends conventional warfare, irregular warfare, and cyber warfare with other destabilizing methods like foreign influence, disinformation, and economic pressure.¹ In the Venezuelan context, this concept involves a multidimensional confrontation:²

Key Components of the Alleged Hybrid Conflict:

• Economic Pressure (The "Economic Warfare" Component): This is the most significant element and is discussed in detail below.

• Information and Cognitive Warfare: This includes the use of disinformation and "fake news" across both traditional media and social networks to create internal destabilization, delegitimize institutions, and promote narratives of crisis and ungovernability.

• Political and Diplomatic Coercion: This involves using international bodies (like the OAS, Lima Group) to isolate the government, recognize opposition figures, and call for institutional rupture or "regime change."

• Irregular/Non-Conventional Tactics: The government and its critics both cite the use of irregular tactics:

  • Opposition Side (Accused by the Government): Promoting violent street protests (guarimbas), calling for foreign military intervention, and attempted coups or military uprisings.

  • Government Side (Accused by Critics): Deploying armed pro-government militias (Colectivos) to repress protests, using state security forces for extrajudicial killings, and allowing guerrilla groups (ELN, FARC dissidents) to operate.

The key characteristic of the hybrid warfare narrative is the simultaneous, non-linear application of these various tools to force a change in the political status quo.

II. Economic Warfare

Economic Warfare is considered a core element of the overall hybrid strategy against Venezuela, aimed at crippling the state's finances and generating social unrest sufficient to force political change.

The Role of Foreign Sanctions (External Pressure)

The primary tool of external economic warfare is the imposition of sanctions by the United States, the European Union, and other countries. These measures have escalated over the years, targeting:

• Financial Sanctions (2017 onwards): Prohibiting transactions with Venezuelan debt, making it difficult for the government to access international capital and restructure debt.

• Oil Sector Sanctions (2019 onwards): Targeting PDVSA, the state oil company. This includes blocking U.S. entities from doing business with PDVSA and freezing its assets (like the U.S.-based CITGO), which severely restricted the government's ability to sell crude oil—its main source of income.

Impact of Sanctions:

• A UN Special Rapporteur reported that public revenues have been reduced by up to 99% due to the sanctions.³

• They contributed significantly to the collapse of oil production and, consequently, the national economy, though economic contraction and hyperinflation had begun years earlier due to internal mismanagement and corruption.

• The goal of "regime change" has not been achieved, but the sanctions have profoundly worsened the humanitarian crisis and led to mass migration.

Internal Economic Warfare (Domestic Factors)

The Venezuelan government often uses the term "Economic War" to describe internal sabotage orchestrated by opposition-aligned businesses and speculators. This alleged domestic economic warfare includes:

• Speculation and Hoarding: Large businesses are accused of intentionally hoarding basic goods to generate scarcity and fuel black-market price increases.

• Exchange Rate Manipulation: The government claims that opposition-aligned actors use external websites and unregulated currency markets to artificially inflate the dollar's value, triggering hyperinflation and destroying the local currency's purchasing power.

While the government blames external sanctions and internal sabotage, critics argue the devastating economic crisis is primarily the result of mismanagement, price and currency controls, and massive state corruption that depleted national reserves long before the heaviest sanctions were imposed.