PUERTO NUEVO, Colombia (Reuters) - Rotting wooden planks heave as dozens of barefoot Wayuu Indians carry washing machines, fans and stereos on their backs from the hull of a cargo ship docked on the tip of northern Colombia.
Throughout the night, they unload thousands of boxes piled 30 feet high and haul them down the battered ramp to waiting trucks.
By torchlight, customs director Claudia Gaviria rips open a box at the makeshift wharf at Puerto Nuevo on the La Guajira peninsula. She counts the number of fans against documents supplied by the ship.
"If there's more than the paperwork says, we will seize the merchandise and investigate because it could be contraband or even money laundering," said Gaviria, taping the box up and reaching for another. "We found some doctored papers on this ship."
Contraband smuggled into Colombia is part of multi-billion-dollar money laundering operations that damage legitimate businesses, undermining Colombia's bid to reinvent itself as a thriving economy after decades of political and drugs violence.
In complicated schemes, Colombian traffickers receive drug money from overseas dealers in the form of goods, often shipped along with legitimate merchandise. Once the goods are sold and a sales receipt given, the drug money is clean.
The amount of money laundered from the trafficking of drugs, arms and human beings in Colombia is estimated by experts to be as much as $17 billion a year - more than 5 percent of the economy's total value and more than total foreign direct investment last year.
Much of the merchandise unloaded by the Wayuu - the bulk of it legitimate - will make its way to the desert town of Maicao, a Wild West type of place that sells cheap designer perfumes and whiskey at half the retail price, alongside knock offs of Prada and Giorgio Armani label goods.
"That goods are sold at lower prices than they are produced in the factory says it all," said national tax agency head Juan Ricardo Ortega.
Last year, as much as $128 million worth of contraband was seized by authorities, less than 10 percent of the amount estimated to come into Colombia, according to government data.
"It's an impossible task," said Luis Carlos Canas, head of the tax office in northern Maicao, as he inspects ingots of aluminum on an 18-wheeler crossing the border from Venezuela. "We just don't have the human resources to check everything."
Exports also are part of the laundering business. Fake paperwork is created for overseas sales that do not exist. Once the paperwork is filed at the customs office, cash from international drug deals can enter without raising suspicion.
Colombia's official annual gold exports are reported to be as much as 70 tons, Ortega said, although the industry only produces 15 tons. While there is a considerable amount of artisanal gold that could account for some of the extra, Ortega suspects the bulk is fictitious sales.
So while Colombia continues to transform its image from a violence-plagued nation to an investment magnet with booming oil and mining industries, the economy is skewed by the money laundering of traffickers' cocaine sales abroad.
Colombia has for decades struggled to reduce crime linked to the drug trade, waging a U.S.-backed war against Marxist rebels, right-wing paramilitary groups and cocaine cartels. But crime gangs have become more wily in duping authorities.
Back in the days of Colombia's best-known drug lord, Pablo Escobar, in the 1980s, so much laundered cash simply came in by plane from the United States that dealers just buried it around their homes. Now things are far more sophisticated.
There are three main ways the gangs clean their money: smuggling undeclared physical cash across the border; through the financial system; and via contraband.
It is not just the proceeds from drug trafficking - about $8.8 billion a year - that gets laundered. Money earned from corruption, gun running, prostitution, and illegal gold mining also needs to be cleaned.
Once it makes it into Colombia's $330 billion economy, it can inflate economic growth numbers by several basis points, said Luis Edmundo Suarez, head of the UIAF, a government body that looks into suspicious money movements and sends them for investigation.
"The launderer is only interested in injecting the money into the system," Suarez said at his Bogota office. "It creates suffering, distorts the economy and alters reference prices as he doesn't care if he loses money, just that it's cleaned."
Ortega reckons a large range of official data from inflation to real estate, retail, exports, imports and agricultural output may be different than reported due to fake or overstated sales from laundering.
The problem for ordinary Colombians, Ortega says, is that laundered goods are mostly sold at below-market prices, which elbows out and often shutters competitors.
Conversely, it can create price bubbles in certain sectors when criminals pay excessive amounts for goods like farms or bill extra through restaurants and stores.
"For a poor country, the social impact is brutal," Ortega said. "It limits growth and destroys opportunity for legitimate business."
Cattle ranching, for example, is a common financing vehicle along with drugs for left-wing rebels of the Revolutionary Armed Forces of Colombia, known as FARC, as well as other drug cartels.
They often pay above value for cattle farms and that in turn pushes up prices for neighboring property. Then they liquidate assets, the cattle, to receive quick cash, cutting the price of livestock in the area.
Many agriculture businesses in central Meta province, for example, are looking to sell off and get out because they cannot compete with the low livestock prices on offer.
"You can tell from the price of beef in some rural areas when a crime gang is selling its stock of cattle," Suarez said.
Farmers are intimidated into selling their land and offered cash sums they can't refuse, according to a cattle rancher with land in Meta who requested anonymity for security reasons.
"It's hard to refuse the drug dealers," the rancher said. "And we also face herds of cattle coming in illegally from Venezuela as contraband that slashes the price of the beef."
The government says the FARC is among the biggest owners of cattle - assets that are easy to turn into cash to buy weapons or food and clothing for their 8,000-strong fighting force.
Colombia's financial system, surprisingly, is among the most rigid and successful in protecting against money launderers. Red flags go up with any unusual movement of cash.
Banking clients complain about the charges levied each month and the mountain of paperwork needed to open an account, but Maria Mercedes Cuellar, head of the Asobancaria banking union, says that is what keeps the system safe. "Colombia has more controls in its system than most places in the world, even more than in the U.S," she said.
But that also causes its own set of problems, she says, since it facilitates a cash-based economy that enables launderers. They simply work outside the system, she said.
Even so, Interbolsa, one of Colombia's biggest financial institutions until it was seized by authorities late last year, is being investigated for alleged money laundering.
While detecting smuggled goods has proved tough, authorities have turned to accountants to catch the smugglers, just as U.S. authorities did with legendary gangster Al Capone in the 1930s.
"If we can't pursue them for contraband or laundering, we'll pursue them for tax evasion," Claudia Rincon, head of the tax office's legal department, said of the uphill task. One of her agents was assassinated just weeks ago in connection with her work as a tax investigator.
The attorney general's office says that as the government gets tougher on launderers, the cases are piling up and the judiciary needs more personnel to take them to trial.
"Indisputably we need triple the number of lawyers and investigators dedicated to this crime of money laundering," Attorney General Eduardo Montealegre told Reuters.
It might seem that huge amounts of cash entering the economy - into luxury cars, real estate, and clothing - would cause the economy to boom but experts disagree.
"It's like when you inject morphine into a cancer victim," Suarez said. "At first you feel good and you have less pain but then you die. There's absolutely no way that you can consider money laundering as positive for the economy."
The lowly smugglers who do the leg work certainly do not see much of the profit but they say there are few other ways to make a living.
"How else can we feed our families?" Juancho said after being pulled from his car by police on a highway in La Guajira province. The police confiscated plastic jerry cans of fuel, part of a multi-million-dollar gasoline running business that thrives along the porous border with Venezuela.
Cheap fuel, at 2 cents a gallon, is smuggled over the border from Venezuela in cars outfitted with fake tanks, hollowed-out seats and double paneled doors, and sold at $5 at lucrative pumping stations in Colombia.
As Juancho was being questioned by police outside the car, his partner sped off in their red souped-up Renault 18, screeching over spiked barricades as police trained their rifles at it.
Juancho was later released. He says he earns just $13 for risking the four-hour race south with the gasoline but he has no intention of giving up.
"We'll be back tomorrow," he said. "They won't stop us."
Editing by Kieran Murray, Claudia Parsons and Bill Trott