MEXICO CITY (Reuters) - Rapid growth in private, unregulated security companies in Mexico has contributed to corruption, human rights abuses and excessive use of force, a report found on Tuesday, as the country suffers record levels of violence.

Lawlessness fueled by organized crime and corruption has spurred demand for private security services, a market worth billions of dollars, said the report by the Inter-American Dialogue, a Washington-based think tank.

Some 8,000 private security companies, or up to 80 percent of the total, work outside government regulation, it found. Mexico recorded its highest murder rate since modern records began in 2017, and companies also face rising levels of burglary, robbery, cargo theft and extortion.

The Inter-American Dialogue report said with the spread of private security firms “a lack of oversight and enforcement has led to instances where corruption, human rights abuses and excessive use of force have gone unchecked.”

Red tape means registering a security company can be difficult and expensive, but there is little government enforcement of the rules, making it easy for small firms to spring up offering protection services, the report said.

“It’s easier to just find a group of friends and start offering services to nearby local businesses that need security but can’t afford the prices, plus tax, of the regulated firms,” said James Bosworth, a researcher who worked on the report.

The proliferation of armed security personnel operating without oversight creates risks, the report said.

The National Security Council estimated that in 2016 the formal industry alone, which does not include unregulated security firms, was worth $1.5 billion - this is a 180 percent increase from 2012.

Bosworth said that even registered companies had little incentive to follow rules because the government rarely punishes those that commit abuses or lose track of firearms, which can end up in the hands of criminals.

The Defense Ministry, which issues firearms licenses to private security firms, and the Interior Ministry, which registers private security firms, did not immediately reply to requests for comment.

The Inter-American Dialogue warned that since violence, and with it the private security industry, could grow further, the government needed to punish those in the industry who commit abuses or violent acts that worsen the security environment.

“The goal of our recommendations is to improve security and human rights, not increase red tape for the sake of creating more paperwork,” Bosworth said.