On April 26, The New York Times published a revealing investigation into how gold sourced from illegal mining in Colombia and other countries—as well as gold seized or controlled by authoritarian regimes such as Venezuela and Nicaragua—is funneled into exports bound for refineries in North America and Europe.
Reporters Justin Scheck, Simón Posada, and Federico Ríos describe a breakdown in the safeguards of the U.S. gold industry and in traceability systems more broadly. Their conclusion is stark: a portion of nearly every gold bar refined in the West contains metal extracted by drug cartels, dictatorships, and criminal networks responsible for deforestation and widespread environmental contamination.
For months, La Prensa has documented how the Ortega-Murillo dictatorship has captured Nicaragua’s gold sector. Gold has become an instrument of power—used to enrich the ruling family, finance the repressive apparatus, and attract opaque capital flows, including from Chinese sources that thrive in environments marked by corruption and environmental destruction. Under the regime’s protection, a network of Chinese-linked entities has amassed more than 70 mining concessions, covering over 8 percent of the country’s territory.
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U.S. Sanctions the Ortega Sons
The scheme has become so evident that it has drawn international scrutiny. On April 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned government officials, regime proxies, Chinese companies, and even two children of the ruling couple. This was not an isolated move, but the third such intervention in recent years, following similar actions in 2022 and 2024 aimed at dismantling the regime’s rent-seeking structure in the sector.
The New York Times report adds a crucial element: the sustained rise in gold prices—up more than 400 percent over the past decade—has turned the industry into a magnet for criminal and authoritarian actors. In Nicaragua’s case, the dictatorship is not merely a participant; it is the system’s organizer.
Under the pretext of formalizing informal miners, the regime has created a mechanism for rent extraction. Processing plants such as BHMB—illegally expropriated without compensation—have reported being forced to withhold up to 10 percent from purchases of ore from artisanal miners. The incentive structure is perverse: the more miners are “formalized,” the greater the revenue. In practice, registration functions less as a legal safeguard than as a political formality.
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A Dark System
The result is a system devoid of traceability. Regulators lack the capacity to verify the origin of ore. This was made clear when it emerged that Nicaraguan miners were illegally exploiting deposits in border regions of Costa Rica, then transporting the material back into Nicaragua and selling it to Chinese firms protected by the regime as supposedly “legal” artisanal production. For Costa Rica, the consequences have been devastated forests, contaminated soil, and affected communities.
In this context, requiring processing plants to verify the legal origin of ore amounts to little more than an empty formality. As long as sellers are registered, the system validates them—even as the growing number of registered miners makes effective oversight impossible.
In Nicaragua, as in other countries, the only genuine way to ensure traceability would be for large industrial operators to process exclusively ore extracted from their own concessions—without purchasing from small-scale miners or allowing informal mining within their territory. But that would mean forgoing a substantial share of supply at a time when global demand for gold remains insatiable.
The conclusion is clear: absent effective controls, major refineries, central banks, investors, and end consumers will continue—knowingly or not—to participate in a tainted supply chain. Behind each gold bar may lie environmental degradation, political repression, systemic corruption, and organized crime.
That is the reality that has come to define Nicaragua under the corrupt dictatorship of Ortega and Murillo.
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