With gold prices at historical highs, South American cartels are now making more money off illegal mining than trafficking cocaine.

Prices for gold, which is viewed as a safe haven asset and also a hedge against inflation, have been skyrocketing. Gold was trading at $3,300 per ounce on Thursday morning, just off a record high.

That means that the value of the American dollar has plunged to record lows of less than a 3,300th of an ounce of gold from the 35th of an ounce of gold at which it was redeemed after World War II until the collapse of the Bretton Woods monetary system in 1971.

Now, Financial Accountability and Corporate Transparency program director Julia Yansura says, organized crime groups have been increasing their involvement in illegal mining to cash in.

“When you get a really dramatic increase in the price of gold, that unfortunately plays right into their hands,” Ms. Yansura told Insight Crime. “It means that criminal groups have more money that they can use to buy weapons, to finance operations, to wreak havoc in our various countries.”

She says drug trafficking organizations are always looking to diversify into other income-producing opportunities. They have increased investing in illegal gold mines and extorting small-time miners.

Cartels in Colombia and Peru use gold as a money laundering strategy by moving it across borders to buy real estate or sell it for cash. Ms. Yansura says gold is hard to trace, which makes it enticing for the cartels. There is no test to accurately determine where the gold was mined or whether it was illegally mined.

OjoPúblico reports that confidential documents from the Colombian Attorney General’s Office show that illegal mining represents more than 50 percent of the total economy of criminal groups in several regions of the country.

A report by the Organization of American States claims that more than 70 percent of the gold leaving Colombia is of illegal origin. It says that illegal gold extraction exacerbates numerous challenges the country faces, such as citizen security, environmental damage, and corruption. The report says criminal organizations are able to leverage their extensive networks, ample financing capacities, and armed violence in order to develop illicit gold networks.

Colombia has taken numerous steps to combat the sale and export of illegal gold, including expanding oversight of gold supply chains and conducting operations to disrupt illegal mining activity. Despite this, illegal trade in gold continues to thrive.

The Council on Foreign Relations says that U.S. metal companies have purchased billions of dollars of illegally mined Latin American gold over the past decade. The FBI notes that because gold bullion is classified as a commodity rather than a monetary instrument, the imported gold is not subject to Treasury Department reporting requirements.

The FBI established the Illegal Mining Initiative to disrupt transnational criminal organizations and warned that they pose a significant threat to national and international security due to financing from illegally mined gold.

A bipartisan bill was introduced in the Senate in February to require the State Department to develop a comprehensive strategy to combat illicit gold mining in the Western Hemisphere.

“Criminal organizations and authoritarian regimes will do whatever it takes to enrich themselves, and that includes illegally mining and trafficking gold throughout Latin America,” bill co-sponsor Senator Cornyn says. “Our bill would bring together the private sector and State Department to help our partners in the Western Hemisphere disrupt illicit mining practices and prevent bad actors from using gold to finance their nefarious acts.”

The Foreign Relations Committee will consider the proposal at a May hearing.