Crime And Security Risk

Vulnerability To Crime (21.8/100): For decades insurgent groups have propagated high crime rates, cultivating a high-risk environment for investors and businesses in Colombia. A transition from large ideologically driven groups to smaller profit-driven gangs has merged in recent years. This has led to an increase in street crime and burglary in urban areas, while the agricultural and extractive sector businesses that are based in rural areas are vulnerable to kidnapping and violent attacks, which raises security costs. Although the police force has the necessary equipment and manpower is well integrated with other security services, and has improved the response to criminal activity, its effectiveness is stifled from the constantly changing tactics of new criminal gangs and splinter groups. Concerns about corruption also undermine confidence in the police force's effectiveness to enforce the law, investigate and prevent crime at all times.

Conflict Risk (32.8/100): After more than half a century of civil war and the prevalence of drug trafficking networks, Colombia has made huge strides in improving its security situation in recent years. While this marked a positive step for the country's security environment, gains are being realised at a slow pace. Colombia remains beset by guerrilla rebels and criminal networks from demobilised rebel organisations involved in a wide range of violent activities, such as kidnappings and bombings of critical infrastructure, which pose a significant threat to business operations in the country. These groups seek to fill the gap, including controlling the network of drug trafficking left behind by the FARC, posing a serious danger to land-based transport networks. Armed groups including the ELN, are using the Covid-19 pandemic to expand their control in the country, which adds additional risks to the pandemic beyond economic and health dangers. In addition, volatile diplomatic relations with Venezuela can cause disruptions to business operations, particularly when it comes to border regulations and migration. Nevertheless, the risk of interstate conflict is lowered by the fact that Colombia is a major US ally in the region, which strengthens its security forces against external aggressors.

Business Crime (68.7/100): Business crime risks remain moderate in Colombia owing to the government tightening financial regulation and elevating report standards to international norms. Colombia also boasts one of the highest corporate governance standards globally, adhering to high levels of corporate social responsibility. However, businesses still need to be aware that Colombia's financial system can be exploited by criminal gangs, where investors could face risks associated with organised crime and illegal activities, including the risk of incurring financial losses from fraud and money laundering.

Our Operational Risk Index quantitatively compares the challenges of operating in 201 countries worldwide. The index scores each country on a scale of 0-100, with 100 being the lowest risk state. The entire index consists of 24 sub-index scores and 84 individual surveys and datasets, which all contribute to the headline score. A full methodology can be found at the end of the report.

Key View: After more than half a century of civil war and the prevalence of drug trafficking networks, Colombia has made huge strides in improving its security situation in recent years. While this marked a positive step for the country's security environment, gains are being realised at a slow pace. Colombia remains beset by guerrilla rebels and criminal networks from demobilised rebel organisations involved in a wide range of violent activities, such as kidnappings and bombings of critical infrastructure, which pose a significant threat to business operations in the country. These groups seek to fill the gap, including controlling the network of drug trafficking left behind by the FARC, posing a serious danger to land-based transport networks. Armed groups including the ELN, are using the Covid-19 pandemic to expand their control in the country, which adds additional risks to the pandemic beyond economic and health dangers. In addition, volatile diplomatic relations with Venezuela can cause disruptions to business operations, particularly when it comes to border regulations and migration. Nevertheless, the risk of interstate conflict is lowered by the fact that Colombia is a major US ally in the region, which strengthens its security forces against external aggressors. Overall, Colombia receives a score of 32.8 out of 100 for Conflict Risk, ranking it 19th out of 20 states in Central and South America, only above Venezuela.

Latest Conflict Risk Analysis

• Security issues and drug eradication will be major priorities for the Duque government in Colombia over 2020. Both left- and right-wing groups have criticised Duque for failing to improve security since he took office in August 2018. Leftist political leaders, human rights groups and the Fuerza Alternativa Revolucionaria del Común, the newly formed political party founded by demobilised members of the Fuerzas Armadas Revolucionarias de Colombia (FARC) insurgent group, have urged Duque to bolster security in rural areas and provide government protection for demobilised FARC members and left-wing activists. Furthermore, centrist parties voted to override Duque’s veto of statutory legislation overseeing the Special Jurisdiction for Peace, a tribunal for former guerrillas to confess their crimes in exchange for lighter sentencing.
• Despite the expectation of continued strong anti-drug operations in Colombia over the long term, we believe the problem is unlikely to disappear over the coming years. This view is underpinned by the fact that cracking down on drug production in Colombia often displaces the shadow economy industry into countries such as Venezuela, Peru and Ecuador. This is likely to remain a potential source of tension between the Andean countries.

Colombia's medium- to long-term attractiveness as an investment destination will be boosted by easing security risks following the signing of a peace agreement in 2016 between the government and the FARC, the largest guerrilla movement in the country. Nevertheless, highly coordinated and well-financed leftist groups in the country have sustained long-running insurgencies and carried out consistently high impact terrorist attacks over many decades. Although some of these groups have now largely been demobilised, many of their former members have since joined violent criminal organisations, perpetrating other crimes, such as kidnapping, extortion, damage to property and causing power outages. Colombia has one of the highest levels of wealth inequality globally, with a small elite owning the vast majority of the land. This continues to threaten social stability, which is likely to become more pronounced if high unemployment persists. These risks are reflected in a very low score of 17.8 out of 100 for Terrorism and Political Violence Risk, placing Colombia 19th out of 20 Central and South American states, only ahead of Venezuela.

Terrorist Threat

There is still a high risk of terrorist activity in Colombia, particularly from the National Liberation Army (ELN), rebels from the demobilising FARC guerrilla organisation, as well as other illegal armed groups. In August 2016, FARC and the Colombian government agreed on a bilateral peace deal, which, if it holds, will bring an end to one of the world's longest running militia insurgents that has left thousands of people dead and at least 7mn displaced. Nevertheless, Colombia's President Duque, who took office on August 8 2018 had, during the campaign trail, promised to revisit the peace deal. In June 2020, the Government and FARC resumed the peace agreement’s implementation dialogue, almost a month after bilateral negotiations ceased. However, the negotiations remain fragile and could once again fall flat on short notice.

This is believed to be among the key factors that helped him beat his rival Gustavo Petro, a former militant himself who has defended the peace agreement. Revisiting the peace accord, however, risks reigniting the decades-long insurgency and will pose serious threats to critical infrastructures, such as gas, oil and electricity supply lines, in addition to endangering the lives of foreign employees in Colombia. Furthermore, other armed groups still exist, which are carrying out attacks on public transport and industrial infrastructures, such as oil and energy facilities, government buildings and other state bodies. While foreigners are not usually targeted, businesses and their employees, however, need to be vigilant in public spaces as they can be entangled in the violence. Furthermore, rights groups in the country have warned that armed groups including the ELN are using the Covid-19 pandemic to expand their control, threatening those who break the curfew with punishments and even death.

Key View: For decades insurgent groups have propagated high crime rates, cultivating a high-risk environment for investors and businesses in Colombia. A transition from large ideologically driven groups to smaller profit-driven gangs has merged in recent years. This has led to an increase in street crime and burglary in urban areas, while the agricultural and extractive sector businesses that are based in rural areas are vulnerable to kidnapping and violent attacks, which raises security costs. Although the police force has the necessary equipment and manpower is well integrated with other security services, and has improved the response to criminal activity, its effectiveness is stifled from the constantly changing tactics of new criminal gangs and splinter groups. Furthermore, crime groups are also capitalising on the police and government's focus on the Covid-19 pandemic which leaves the police with limited resources to continue the fight against crime. Concerns about corruption also undermine confidence in the police force's effectiveness to enforce the law, investigate and prevent crime at all times. Consequently, Colombia receives a low score of 21.8 out of 100 for Vulnerability to Crime, ranking 13th out of 20 states in the Central and South America region.

Latest Vulnerability To Crime Analysis

• Criminal gangs and armed groups may take advantage of the Covid-19 pandemic to expand their operations and increase recruitment from the large pool of unemployed workers and low-income groups. With the attention of government and security forces focused on containing the spread of the virus, illicit groups can expand their activities and may emerge stronger from the crisis. The pandemic could also result in an increase in petty crime as deprivation forces people into criminal activity.
• Venezuela'sTren de Aragua gang, which has become one of the most powerful and violent criminal groups in the country, has begun to expand into territories near the Colombian border. The expansion of the Tren de Aragua to new territories near Colombia, such as Táchira, poses a significant threat on both sides of the border. The gang has proven to be capable of recruiting large numbers of members and equipping them with military grade weaponry. Risks are growing for Colombia in this regard as well as for any personnel and businesses located near the Venezuelan border. Violent activity may increase, especially if the group spreads further into Colombia and begins to recruit Colombian members, potentially leading to splinter groups or allied factions within Colombia.
• According to local media reports, eight young adults were killed by a group of armed men in Samaniego as they were having a conversation in a home on August 15 2020. Jhon Rojas, the governor of the Department of Nariño, where the town of Samaniego is located, told Semana Magazine that a wave of violence in the last two months has taken the lives of 20 people. Colombia's Defense Minister Carlos Holmes Trujillo announced that the military will be sent out to support local police forces, and authorities are offering a reward of COP200mn (USD53,000) for information leading to the arrest of the killers. This further elevates the risk that the local police are incapable of dealing with the violence which could see levels rise and businesses getting targeted for extortion.

Illegal armed groups in Colombia, as well as splinter groups that have formed from paramilitary organisations, have propagated high crime rates in addition to terrorist-style attacks, contributing to a difficult environment in which to set up business operations. While some big organised crime syndicates have been demobilised, small-scale, but still violent criminal activities have become the key security concern for businesses, with almost all types of crime increasing significantly over the last five years. Expatriates may be targeted for theft and kidnapping, while both residential and business property is vulnerable to being burgled. Although mostly gang-related, there is a risk that foreign workers will be caught up in the violence, or injured when resisting robbery or abduction. It is important to note that while Colombia's crime rates mostly remain below other major Central and South American economies, such as Mexico, the general climate of insecurity contributes to the country's low score of 9.0 out of 100 for Violent and Petty Crime, ranking Colombia in 14th position out of 20 Central and South American states.

Petty Crime

Expatriates in Colombia are exposed to a wide range of criminal threats, some of which are general and opportunistic, and others specifically targeted. Foreign workers are often a preferred target for crime in Colombia due to a perception of wealth in comparison with the local population. This is evident in all types of crime, including petty theft, burglary and kidnapping. Common opportunistic crimes in Colombian cities include purse- and phone-snatching, violent and non-violent robbery, and credit/debit card scams. Moreover, 'express kidnappings', known locally as 'paseo millonario' continue to present safety concerns in some of the main cities. This involves victims being taken to ATMs under threat of violence and forced to empty their bank accounts. Crimes that involve the use of drugs to incapacitate and rob the victim are further dangers. The use of the drug scopolamine, which is lethal in large doses, is common in bars and nightclubs frequented by expatriates. In 2016, there were 5,210 reported cases of scopolamine use in crime countrywide.

Reported crimes in Colombia are increasing in most cases, as the illicit activities of smaller gangs have overtaken the more large-scale and terrorist-style attacks perpetrated by terrorist organisations. Petty thefts remain the most likely crimes to affect foreign workers, according to the latest available United Nations Office on Drugs and Crime data, with 180.5 reported incidents per 100,000 people in 2018, showing a decrease from 2014, when the theft rate stood at 180.5 per 100,000 people. More violent forms of criminal activity are also present, with the robbery rate being 244.4 per 100,000 people in 2018. The assault rate stood at 346.1 per 100,000 people in 2018. These statistics demonstrate a worrying trend of criminal activity in Colombia, which requires a change of approach in the security services in order to stem this rise.

Kidnapping is also a threat to foreigners, in particular those working in extractive industries and those who are based in remote areas. In addition to express kidnappings, more long-term abductions have been a favoured tactic of Colombia's insurgent groups, used to intimidate or incapacitate security forces and politicians, achieve the release of captured fighters, and raise funds through ransoms. The BACRIMs that have emerged in recent years have also adopted these tactics; however, the rate of kidnapping has marginally remained stable between 2013 and 2018 (latest available data), at 0.6 per 100,000 people. This can be attributed to the shrinking presence of the large rebel groups. That said, kidnappers frequently target wealthy expatriates who are perceived to be able to afford ransoms, and this threat is likely to be utilised more by the smaller criminal groups who are more interested in revenue-raising than political ambitions and will, therefore, be less likely to target government officials.

Key View: Business crime risks remain moderate in Colombia owing to the government tightening financial regulation and elevating report standards to international norms. Colombia also boasts one of the highest corporate governance standards globally, adhering to high levels of corporate social responsibility. However, businesses still need to be aware that Colombia's financial system can be exploited by criminal gangs, where investors could face risks associated with organised crime and illegal activities, including the risk of incurring financial losses from fraud and money laundering. Overall, these factors leads to a high score of 68.7 out of 100 for Business Crime, ranking Colombia third out of 20 Central and South American states.

Latest Business Crime Analysis

• According to Colombia's national anti-money laundering body, the Financial Investigations and Analysis Unit, record cocaine production in Colombia is causing criminal groups to increasingly diversify their traditional money laundering techniques involving real estate and large public works contracts, as well as new laundering methods involving cryptocurrencies and non-profit organisations. This shift in money laundering is mostly linked to the departure of the Fuerzas Armadas Revolucionarias de Colombia-Ejército del Pueblo, which is leading to the creation of more localised criminal groups which are profiteering from large amounts of cocaine production. These smaller criminal gangs have started to invest in properties in smaller municipalities in areas that are strategic to the cocaine trade, such as Nariño and Cauca. As Colombia's criminal landscape changes, traffickers are adapting their money laundering strategies to best suit the current dynamics of the cocaine trade.
• More Colombians than ever before have access to internet-enabled services, but many users are still not well versed in using them safely. This keeps firms and users exposed to internet fraud, such as phishing, and other types of user-related weaknesses are exploitable by criminal elements, both locally and abroad. The use of malware in lieu of phishing and confidence scams are growing, with the sophistication of attacks remaining relatively simple given the perception of low-education among internet users. Businesses are strongly advised to invest in security measures and to educate both customers and employees on potential threats. Such measures are likely to curb the efficacy of cyberattacks, at least until users become better educated.

Compared with the significant threat from other forms of criminal activity in Colombia, businesses do not face a high risk from financial and cybercrime. Private companies are also offered some protection from money laundering activities and cyberattacks due to increasing government efforts to improve financial regulations and cybersecurity. Nevertheless, the activities of criminal gangs mean that money laundering occurs on a relatively large scale and through a variety of legitimate channels, including financial institutions, casinos, and prepaid cash cards, as well as trade-based money laundering. This means that businesses are at risk from processing transactions of funds derived by illicit activities and, consequently, fined if this is not properly reported. In addition, cybercrime is a growing concern as internet penetration increases, forcing businesses to take further action to protect their networks. Overall, however, these are secondary concerns to other forms of criminal activity, and Colombia therefore scores a high 55.0 out of 100 for Financial and Cybercrime Risk, ranking it 10th out of 20 Central and South American states.

Financial Crime Risk

While Colombia is not a major regional financial hub, its formal financial industry is frequently exploited by criminal gangs in order to launder funds gained from a wide range of illegal activities. The primary source of revenue for criminal gangs is drug trafficking, but they also derive funds from illegal mining, the production and sale of counterfeit goods, illegal gambling rackets, smuggling of petroleum and alcohol, extortion and kidnapping. The profits gained from these activities are then laundered through the banks and other financial institutions, or processed through money brokers in the informal financial industry. The Colombian government estimated that money laundered by criminal gangs and insurgent groups is equal to USD10bn a year, with these funds often invested back into legitimate ventures. The main risk to businesses stems from the potential to unwittingly process funds derived from illicit activities, hence, if discovered by authorities, resulting in considerable fines and reputational damage.

While Colombia has fairly strict anti-money laundering (AML) regulations, the US Department of State still classifies it as a primary concern to money laundering and financial crimes. Financial institutions and other businesses, such as mining companies, are particularly exposed to money laundering activities as funds from illicit drug trafficking and illegal mining find their ways into the formal economy. In addition, the presence of domestic terrorist and organised crime groups means that businesses need to tighten their internal controls in order to avoid being entangled in funds used to finance terrorist activities, which bring serious reputational and regulatory risks.

The potential for businesses to fall victim to financial crime risks is moderate, nevertheless, due to sustained attempts by the government to enhance the AML regime and close gaps in financial regulations. However, the potential negative impact of being entangled in these activities can be very damaging. The Colombian Congress introduced the Asset Forfeiture Law 1849 of 2017, which seeks to close gaps in its asset forfeiture regime. The law modifies the Statute of Asset Forfeiture most notably changing and expediting the procedures for disposition of laundered assets in addition to allocating more resources towards fighting organised crime, drug trafficking and corruption. Firms are required to submit suspicious transaction reports (STRs), including banks, securities brokers, pension funds, gambling companies, importers and exporters, and car dealerships, but compliance remains poor. This is indicated by the relatively low number of STRs filed to the authorities between January and November 2015, which stood at just 7,642 (latest available data) compared with 113,550 submitted in Mexico between January and October 2015. This suggests that companies are failing to adequately investigate suspicious transactions and protect themselves from the risk of processing illegally obtained funds. The government must, therefore, ensure that companies are adhering to the requirements of financial regulations.

For its part, the Colombian government is attempting to tighten regulation of the financial industry and bring reporting standards in line with international norms. For instance, since January 1 2015, all listed and other larger companies, such as subsidiaries of International Financial Reporting Standards (IFRS)-compliant firms, export-import companies, and government-owned or controlled companies, have been required to fully implement the IFRS. Adhering to IFRS is also a public listing requirement by all foreign companies. This will help to close loopholes in financial regulations and make it easier for the government to investigate abnormalities in auditing. The government has also introduced a Unit for Information and Financial Analysis, which is responsible for investigating possible financial crimes and seized more than USD800mn in assets derived from illicit activities. While the availability of police officers, prosecutors, and judges with the correct knowledge and training in financial crimes remains somewhat lacking; nonetheless, there were 29 successful convictions for money laundering between January and October 2015, more than in Mexico throughout the second half of 2014 and the first half of 2015. This is indicative of the Colombian government's efforts to enforce the AML regime, which has seen some success.

Cybercrime Risk

Due to the more immediate risks posed by other forms of crime, cybercrime is not a primary concern for businesses in Colombia. As with other areas of security, Colombia benefits from its close relationship with the US, which provides the country's personnel with training, technology and knowledge to combat cybercrime. Furthermore, Colombia has agreements to share information and strengthen cooperation in combating organised crime with several countries, including South Korea. In 2009, the government created an inter-agency group named colCERT (Colombia's Emergency Response Cyber Team) in charge of coordinating the response to potential cyberattacks to the country's critical infrastructure. In addition, the government launched its first cybersecurity and cyberdefence strategy in 2011 in order to protect national information systems, prevent computer crime and deal with emergencies from cyberattacks. This involved the creation of forces to safeguard government networks as well as to alert the private sector to attacks and investigate cybercrime, thus providing some protection to businesses.

Nevertheless, there remain some gaps to be addressed in Colombia's cybersecurity strategy. The number of secure internet servers available stands at 653.8 per 1mn people as of 2017, which is moderate in comparison with other Central and South American countries, but remains below Chile, Brazil and Argentina. This means that there is a lack of protection for online transactions, as secure servers offer encryption technology, which creates obstacles for cybercriminals attempting to steal data or money. Moreover, in 2014, Colombia's Chamber of Communications issued a report recommending a more centralised approach to cybersecurity coordinated by one national agency, as well as the implementation of dedicated cybercrime prosecution teams in the justice system, and greater international cooperation on cybercrime prevention.

Businesses in Colombia remain at some risk of cyberattacks. According to Verizon's Data Breach Investigation Report for 2014, Colombia was the fifth most common victim of cyberespionage, after the US, South Korea, Japan and Russia. The most common instances of cybercrime in Colombia are credit card fraud and identity theft. In addition, criminals often target ATM machines and point-of-sale controllers and terminals for the purposes of acquiring card and other banking information, which are then used to make fraudulent transactions. Colombia is also the worst-affected country in Central and South America for phishing scams, whereby criminals steal personal data to take money from bank accounts, estimated to have caused losses of up to USD95mn in 2013. Consequently, although businesses may be more concerned with mitigating the more traditional threats posed by criminal gangs, they should not neglect cybersecurity.

Cybersecurity Regulations And Data Localisation

While Colombia boasts some of the strongest cybersecurity regulation in the Latin America region, it still has a long way to go in localising its data centres. The country's initial data protection legislation was drafted by including some key elements from the EU Data Protection Directive, but has since been replaced by the EU's General Data Protection Regulation (GDPR). The GDPR is regarded as the toughest privacy and security law in the world. While the GDPR was drafted by the EU, it imposes obligations onto organisations anywhere, so long as they target or collect data related to people in the EU. Colombia's data protection regulations distinguish between personal data and a sub-category of sensitive personal data, depending on the information and the harmful effects caused by its unlawful use. Law 1266 and Law 1581 contain particular rules related to sensitive personal data. Statutory Law 1266 of 2008 (Law 1266) regulates the processing of financial data, credit records and commercial information collected in Colombia or abroad. While Law 1581 defines special categories of personal data, including sensitive data and data collected from minors.

The Colombian Data Protection Authority, namely the Superintendence of Industry and Commerce (SIC) has the power to investigate ex officio and based on complaints, alleged violations of data privacy and data protection rights of Colombian data subjects and of data subjects domiciled in Colombia. The SIC is the most important data protection authority for the enforcement of Law 1266/2008, a statutory law that regulates Article 15 of the Constitution with regard to the data privacy rights of individuals and legal entities. Also, Law 1581/2012, Colombia’s most comprehensive statutory general data protection law, which governs all processing of personal data of individuals. The SIC must issue instructions and orders under the law concerning the administration of financial, credit and commercial services (including those originating in third countries) and establish the criteria that enable compliance therewith and the procedures for their application. It also has the duty to ensure that data processing operators and sources have a security system and any other technical capabilities needed to protect and update records and avoid their adulteration, loss, consultation or unauthorised use. The Colombian Criminal Code establishes that acts or omissions that violate personal data protection rights, (including unauthorised collection, compilation, subtraction, offer, sale, exchange, interception, disclosure or modification of personal data), for ones benefit or that of a third party, will be subject to sanctions of imprisonment for a term between 48 to 96 months, and a fine of up to 1,000 minimum legal monthly salaries (approximately USD272,900).

Data localisation laws in Colombia are quite limited. Colombia places restrictions that apply to international data transfers. However, these restrictions act only in certain conditions. According to Law 1581,8 international data transfers of personal data to countries that do not provide an adequate level of protection for personal data is prohibited, unless express consent is given, the processing is done with the purpose of preserving the data subject's medical data. Also, international data transfers are permitted if they are banking or stock exchange transfers, they are transfers agreed in international treaties, they are transfers for pre-contractual or contractual performance (as long as the data subject has consented) and if the data transfer is legally required in order to safeguard public interest or for the acknowledgement or defence in a judicial process.

Colombia's corporate governance profile outperforms that of its regional peers and is one of the best globally. The country adheres to the corporate social responsibility principles outlined in the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, and the Colombian government encourages public and private enterprises to follow these guidelines, with Colombian corporates being recognised on an international level for their corporate social responsibility initiatives. The country also has adequate environmental laws, is proactive in enacting environmental protections, and does not waive labour or environmental regulations to attract investors. Overall, Colombia therefore scores a high 82.3 for Corporate Governance, ranking first in the wider Latin America region.

Institutional And Regulatory Framework

Colombia's banking sector is regulated by the Superintendencia Financiera de Colombia, which oversees both the country's lenders and financial markets. A 2016 OECD report suggests that the president's ability to directly appoint and dismiss agency heads impinges on the body's independence, so efforts are underway to reform the relationship with the executive, and thus far the agency has a track record of objective enforcement of financial regulations. This is reinforced by the Colombian government's commitment to maintaining a robust business environment to draw investment, especially at a time of weaker investment into the hydrocarbons sector.

In terms of the mining sector, Colombian court decisions to protect the environment will raise costs for miners and create uncertainty in Colombia's legal environment, thus deterring investment. Over the past few years, Constitutional Court decisions such as banning extractive activities in the Paramos regions (high altitude ecosystems) and overturning the federal government's sole authority to approve mining projects, has decentralised the regulatory process and elevated uncertainty in the mining industry. In March 2018, the Constitutional Court ruled against South32's Cerro Matoso mine, finding the nickel mine responsible for health issues in the local community leading to various repercussions. South32 later won its appeal in September 2018, no longer needing to indemnify the local community, but still needed to reapply for its environmental license. Previously, in 2017, South African gold miner AngloGold Ashanti suspended work at the La Colosa project following a vote to ban mining in the Tolima municipality. In that same year, the Constitutional Court blocked a mine expansion at the Cerrejon coal mine, owned by BHP, Glencore, and Anglo American. Following the páramos ruling in 2016, Canadian firms Cosigo Resources and Eco Oro Minerals lost rights to explore and exploit respective project areas.

Strength Of Implementation

The Implementation of Colombia's corporate governance framework in its state-owned entities (SOE's) is overall in line and compliant with the countries corporate governance guidelines as laid out above. In some cases, the Colombian implementation practices could be regarded as strong and have been internationally recognised for their effectiveness,for example in matters relating to equal treatment of shareholders or stakeholders’ engagement. The Colombian state has demonstrated its commitment to facilitating minority shareholders’ and interest groups’ rights. Different line ministries have made sincere efforts to improve the functioning of the SOEs under their responsibility. However, many of these positive developments have occurred on a case-by-case basis within, or under the control of, individual ministries, whereas the biggest challenges remain at the overall, structural level. This means that the process is quite slow and does not apply to all of the government's SOEs.

The Colombian government has devoted substantial resources to get listed companies to align its corporate governance framework with those policies set out by the government in order to promote transparency and market efficiency. On the surface, the country seems to have established effective coordination mechanisms and has been largely successful in driving the implementation of its corporate governance framework. However, the country faces a growing risk from the dropping number of listed companies and the concentration of listed share ownerships by large companies. The regulatory authority has thus dedicated significant resources in tracking ownership structures in listed companies and related party transactions in order to ensure clarity and full disclosure of potential conflict of interest. In February 2016, the World Bank Group launched a corporate governance advisory project for Colombia with the financial support of Switzerland, through its State Secretariat for Economic Affairs to help firms improve their performance, access to finance, and overall sustainability. The project set out to promote better governance practices to contribute to the sustainability of key corporate governance institutions and to strengthen regulations on corporate governance in the country. In addition to this advisory project, international Finance Corporation, the private sector arm of the World Bank Group, promoted good corporate governance at the company level by assisting its investment clients and at the country level, through other advisory projects supporting a better investment climate, and by promoting good practice standards and guidelines.

Business Response

Businesses would need to hire financial crime teams to conduct extensive due diligence and investigate suspicious transactions, as well as closely follow government regulations issued on financial crime. All necessary protections against cybercrime need to be taken, including using the latest security software. Companies also need to ensure their employees are trained in basic cybersecurity measures.