Chapter 3Black Market Peso Exchange
Colombia's Black Market Peso Exchange (BMPE) is an example of a regional black market financial system based on the misuse of international trade. Its original purpose was to obtain restricted hard currency (U.S. dollars) so Colombian businessmen could import goods (primarily from the United States) for resale and offer them at very competitive prices. Over the years, there were disastrous consequences. Inside Colombia, the BMPE harmed Colombian businesses that played by the rules. The BMPE facilitated trading inefficiencies and inequalities; it also circumvented needed revenue streams for the government. And with the expansion of the Colombian-based drug cartels, the BMPE became a key technique to launder staggering amounts of drug money. Today, the BMPE is one of the largest money laundering methodologies in the United States. And BMPE-like systems are found in various areas around the world.
The BMPE is an example of what is sometimes called an informal value transfer system. Other labels include informal banking, underground banking, parallel banking, and some are known as alternative remittance systems. Occasionally, these regional underground financial schemes are simply lumped together and erroneously labeled hawala. (hawala is explained in Chapter 4.)
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