Laundering Mexico's Drug Money: Washing Up The Economist
go to original September 22, 2014

Mexican federal police present packets of cash in U.S. dollars seized a four suspected members of the Norte del Valle de Colombia cartel during a news conference at the federal police center in Mexico City March 9, 2010. Police said was seized $US2.7 million. (Business Insider)

Drug traffickers, like everyone else, only want money because they want what money can buy. But turning dirty cash from drug sales into clean, usable currency has become harder for Mexican drug gangs as a result of tighter banking regulations at home and in the United States, their main market.

The criminals are responding by piggy-backing on cross-border trade to launder their gains.

On September 10th roughly 1,000 law-enforcement officials raided the Garment District of Los Angeles, seizing at least $US65m in cash and arresting nine people. According to court documents, several garment businesses allegedly helped drug traffickers ferry proceeds from sales back into Mexico.

The scheme is relatively simple. Black-market peso brokers contact Mexican importers who want to buy goods from a business in Los Angeles. The broker then finds a gang associate in the United States to pay the bill on behalf of the Mexican importer, using dollars from drug sales. The importer pays the broker in pesos; the broker takes a cut and passes along the remainder to the gang in Mexico.

Such schemes are not new, but they have become more popular as it has become harder to use the banking system to move money. In 2010 Mexico set restrictions on deposits of dollars. It later imposed reporting requirements on cash payments above a certain threshold for items like homes, cars and so on.

Read the rest at The Economist

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