Fighting Illicit Trade and Organized Crime as a Critical Force Multiplier in Chile and the Southern Cone of the Americas: The Urgency of Public-Private Partnerships in Confronting Cross-Border Illicit Vectors

With the nations of Southern Cone of South America facing an unprecedented wave of violence and institutional crises driven by the explosive growth of illicit economies, co-organizers ICAIE, the Organization of American States (OAS), Department Against Transnational Organized Crime (DTOC), and the Camara Nacional de Comercio, Servicios y Turismo de Chile (CNC) led the convening a two-day regional dialogue in Santiago, Chile to discuss these growing existential security challenges to democratic governance and stability, held in Santiago de Chile in June 2025.

The Santiago Dialogue brought together a high-level community of political, economic and security leaders to find key points of consensus on constructing a roadmap for the region’s future. ICAIE and the OECD also organized a corresponding seminar on countering illicit trade in Free Trade Zones (FTZs).

Illicit economies continue to present a corrosive threat to the safety, security, and economic prosperity across the Americas, which have been accelerated in Chile and Southern Cone countries.

ICAIE has defined these dramatic changes in the convergence and expansion of illicit economies as the Fourth Wave of Transnational Organized Crime in Latin America (Farah, 2025), driven by new products including: precursor chemicals for synthetic drugs; new and expanding illicit markets and economies in tobacco, electronics, counterfeit medicines/pharmaceuticals and pillaged gold and critical minerals, poached endangered wildlife, and other environmentally-sensitive goods; new, extra-regional actors now operating in the region, including from China, the Balkans, Turkey and Russia; the emergence of violent criminal gangs embedded in the wave of irregular migrants moving across the hemisphere, primarily from Venezuela; and reordered transportation needs that make ports ever more vital.

Corruption and money laundering are rampant in these growing illicit economies in South America financing greater insecurity in the hemisphere. The vulnerability of some Free Trade Zones (FTZs) and ports continues to be exploited by criminal networks and other bad actors.

The speed and breadth of the evolution of multi-billion dollar illicit markets in Chile, as in the rest of the region, have far outpaced the strategic responses of governments. Chile, long a standard bearer for democracy and institutionality in a region that is increasingly embracing ideologically agnostic authoritarianism to face growing violence and instability, is now at a key institutional and security crossroads.

The leadership by the Chilean private sector, joined by high level government and opposition party leaders and in partnership of international organizations, to convene this dialogue is a bold step in recognizing the new and dangerous convergence vectors of criminal economies.

Before any community can tackle an array of pressing criminal activities and related corruption, it must first understand the scale and impact of challenges posed by cross-border illicit vectors.

Among the noted distinguished speakers and panelists included Chile’s Minister of Public Security, senior Chilean security leadership, regional and international thought leaders on illicit economies, two leading Chilean presidential candidates, municipal leaders, and field investigators. (See Annex 1.)

The meeting produced 12 key recommendations to tackle some of the unprecedented challenges in Chile and the region discussed at the Dialogue. (See Annex 2.)

The Santiago event, related meetings, and the resulting proposals showcase strategies for the implementation of effective administrative, policy, law enforcement, intelligence and customs actions to counter transnational crime and related illicit finance including in Free Trade Zones (FTZs) and at-risk ports.

Some of the recently identified, multiple criminal actors and illicit threats facing the region, as discussed by different experts participating in the dialogue are:

• The expansion of the Tren de Aragua criminal group originating in Venezuela under the protection of the Maduro regime and the resulting surge in violent crime and citizen insecurity, primarily in the northern border region with Peru and Bolivia but now extending to Santiago and further south;
• The growing presence by the Mexican cartels across illicit markets including increased illicit flows of fentanyl in Chile and Southern Cone countries;
• Rapid growth of lucrative and corrosive illegal contraband and counterfeit markets including tobacco and cigarettes based in Paraguay, pharmaceuticals, natural resource (copper, gold and others), weapons and others;
• The rising influence of Chinese criminal groups such as the Bang of Fujian group and more traditional triads in a host of criminal activities, including sourcing precursor chemicals for synthetic drugs, cocaine trafficking, counterfeits, human smuggling, and money laundering;
• Rising influence in specific activities of extra-regional actors such as Iran and Russia operating from Bolivia and elsewhere to undermine democratic norms and institutionality;
• The institutional collapse and surge in criminal activities, markets and homicides in traditionally peaceful countries like Ecuador, leading to violent criminal governance, demonstrating how rapidly states can descend into chaos. The Ecuador example was viewed as the extreme negative model of what could happen to nations in the Southern Cone, and the similarities with Chile’s current challenges were underlined by different experts.

At a time of greatly diminished U.S. support in the region, groups like the OAS and other international organizations (e.g., OECD, INTERPOL, World Customs Organization, FATF) could help facilitate ongoing discussions and expanding regional-international cooperative exchanges.

Given the rapidly changing criminal landscape in Chile and the region, the final recommendations from the dialogue primarily focused on: creating public-private partnerships to combat illicit markets; forming interagency information sharing and coordination mechanisms across the government; and enacting the necessary legislative reforms to give the justice system, law enforcement and intelligence services the new and necessary tools and resources needed face the new threats.

While there was consensus from the collective work on the key recommendations that emerged, among the most important points of agreement undergirding those recommendations was the urgent need to develop a both a regional and national, multi-dimensional “whole-of-society” strategy that has multi-party support so it can be sustained through time and across changing administrations.

There was agreement that the traditional policy pattern in nations that are deeply politically polarized, where each time the governing party changes the previous government’s strategies are rewritten or abandoned, must be changed in order to face the current crisis. A minimum consensus on common goals, legislation and security policies must be negotiated not only among the political parties, but with involvement of the private sector and civil society, in order to allow for more dynamic policies that respect democratic norms, human rights and institutionality. Chile has already begun this process, as has Uruguay.

Public Security Minister Cordero, while outlining Chile’s more comprehensive strategy to combat organized crime and illicit economies, noted that one of the most corrosive factors in the current dynamic is the loss of public faith in government institutions, driven by the widespread perception by the general public that their physical wellbeing is under threat.

This fear factor perception has grown despite the fact that the nation’s overall crime rate remains among the lowest in the hemisphere. This ongoing erosion of state legitimacy demonstrates that national policies must not only have broad political buy-in but must also have public acceptance, so institutions and security forces regain public trust.

Any future government will have to demonstrate to an increasingly skeptical public that the state is recuperating control of geographic spaces occupied by criminal groups, providing safe public spaces, and have both violence prevention and rapid response strategies to criminal violence.

Corruption and money laundering must also be robustly addressed upfront and as integral elements in implementing national anti-crime strategies.

Among the broad strategic goals that were agreed upon by an invited core of the Santiago Dialogue participants the day before the event were:

• The need for a much stronger public-private partnership, with recognition by governments that the private sector can be a key ally in combatting illicit economies that are badly hurting the formal economy and robbing the government of resources. The private sector can identify vulnerabilities in their supply chains, exchange information with the government on the functioning of illicit economies and the identified criminal actors and networks, work to meet international standards in their commercial fields to make international assistance and investment more attractive. There should be formal mechanisms in place so key private sector stakeholders from ports, logistics, telecommunications and the financial sector can provide the government with information (actionable intelligence) and help upgrade technology and infrastructure.

• Creation of national interagency system to exchange multiple types of relevant information across the whole of government to tackle the issues of illicit markets and organized crime in a coordinated, wholistic fashion including through the establishment of intelligence fusion centers. Key parts implementing this is to have the required legal framework and implementation laws passed by the legislature, and having the attributes and functions of each government agency clearly defined.

• Provide municipalities and substate government structures, in addition to national customs and border security agencies, with the necessary resources to detect and combat illicit economic activity. Given that many of the most affected municipalities are located in border regions and have few resources, empowering these local structures with intimate knowledge of the economies, is vital.

• The need to broaden the concept and definition of borders, how it applies to maritime ports, airports and free trade zones and incorporate those sectors into the intelligent monitoring systems that includes sensors, scanners, and control of cargo in transit;

• Strengthen the legal framework and intelligence to cut the flow of financial resources, within clear legal guardrails, to combat organized crime, and strengthen the Financial Analysis Unit. Efforts should not be solely directed at prosecuting financial crimes, but also preventative and dissuasive in nature. Trade-based money laundering and underground illicit finance methodologies need to be better understand including the exploitation of cryptocurrencies and digital assets to hide, move, and reintegrate proceeds of organized crime and illicit trade;

• The need to combat growing institutional corruption, an issue that has helped erode faith in the state, by creating specialized units to prevent and detect criminal capture of state institutions;

• Expansion of international cooperation and maximizing the use of training programs and other resources that already exist, such as the OAS, OECD, WCO, FATF, and INTERPOL, ensuring the country meets the criteria for international evaluations and commitments while engaging in best practices already used in the international community.

Going forward, ICAIE’s “Clean Markets” Project aims to consolidate the dynamic multi-layered framework and a public-private partnership in the Southern Cone, building on the foundation of the meeting of leaders from across social sectors, markets, industries, and communities. (See Annex 3.)

The project will enable ICAIE to partner with OAS-DTOC through a Task Force on Countering Illicit Economies and a hemispheric public-private partnership to promote greater transparency, combat illicit trade, enhance anticorruption efforts, and strengthen law enforcement and the necessary intelligence structures. The initiative hopes to similarly work with committed partners to clean markets in Argentina, Bolivia, Brazil, Chile, Paraguay, Peru, and Uruguay. ICAIE will also advance a Network of Universities to support and conduct evidence-based research to counter organized crime and illicit economies in the Americas including with the University of Universidad Autónoma de Chile (UAutónoma), the Universidade de São Paulo, United Nations Peace University in Costa Rica, and the Anti-Illicit Trade Institute, Terrorism, Transnational Crime, and Corruption Center (TraCCC), George Mason University.

ICAIE will continue to advance the importance of developing intelligence fusion centers that can be coordinated with trusted partners in identifying trafficking and smuggling illicit pathways and leveraging threat intelligence overlays to disrupt converging threats across borders and inter-connected routes, hubs of criminality, risky ports, and free trade zones.

Failure to make the requisite policy adaptations and resource investments necessary to effectively counter transnational organized crime, or insufficiently incentivizing impacted governments to develop stronger national security frameworks results in empowering criminal threat networks. We must strengthen our collective vigilance to protect communities from violence, safeguard against the destructive forces of illicit economies, and to achieve greater hemispheric security and stability.

David M. Luna, Executive Director, ICAIE

Annex 1. FINAL SANTIAGO DIALOGUE AGENDA/PROGRAM, 12 JUNE 2025.

Annex 2. 12 PROPUESTAS CLAVE PARA ENFRENTAR LAS ECONOMÍAS ILÍClTAS Y EL CRIMEN ORGANIZADO

Annex 3. ICAIE WHITE PAPER (JUNE 2025): CLEAN MARKETS IN CHILE & ACROSS SOUTHERN CONE PARTNERSHIPS FOR DISRUPTING CROSS-BORDER ILLICIT TRADE

Read Full ICAIE Final Report for our Santiago Dialogue here, including the 12 Recommendations provided to Senior Chilean officials and Southern Cone regional leaders and experts on ways to strengthen the fight against illicit trade and organized crime across borders.