Sunday, August 29, 2010

Stepped-up Efforts by U.S., Mexico Fail to Stem Flow of Drug Money South

By William Booth and Nick Miroff
Washington Post Staff Writers















LAREDO, TEX. - Stashing cash in spare tires, engine transmissions and truckloads of baby diapers, couriers for Mexican drug cartels are moving tens of billions of dollars in profits south across the border each year, a river of dirty money that has overwhelmed U.S. and Mexican customs agents.

Officials said stemming the flow of this cash is essential if Mexico and the United States hope to disrupt powerful transnational criminal organizations that are using their wealth to corrupt, terrorize and kill.

Despite unprecedented efforts to thwart the traffickers, U.S. and Mexican authorities are seizing no more than 1 percent of the cash, according to an analysis by The Washington Post based on figures provided by the two governments.

The major Mexican drug organizations write that off as the cost of doing business - losing a percentage far smaller than the fees for an ordinary wire transfer or ATM withdrawal, Mexican and U.S. law enforcement officials said.

The Obama administration recently proposed a $600 million surge in spending and personnel, including additional gamma-ray scanners and money-sniffing dogs, as part of an intensifying effort to capture the dollars going from U.S. drug consumers to Mexican mafias.

The drug traffickers and their Colombian suppliers smuggle $20 billion to $25 billion in U.S. bank notes across the southwest border annually as they seek to circumvent banking regulations and the suspicions aroused by large cash deposits, studies by federal officials, regulators and academics show.

"If we fail to curtail these money flows, the confrontation with organized crime will generate more violence and more corruption," Carlos Pascual, the U.S. ambassador to Mexico, said at a border conference in El Paso this month.

Most of the money is smuggled in plastic-wrapped bricks of $20 bills. Often the bank notes retain the sticky residue or fine powder generated by the marijuana, cocaine and methamphetamine sold to the most voracious consumers in the world.

"Cash is the ultimate challenge for us," John Arvanitis, chief of financial operations for the Drug Enforcement Administration, said in an interview. "It moves so rapidly, so fluidly. It crosses borders. It moves in bulk. It is stored in warehouses. It is moved into business. They have multiple, multiple options. They can hide a million dollars in a tractor-trailer, or they can carry it across the border in a handbag."

Since the two countries pledged to bolster joint operations in March 2009 and began searching more vehicles heading south, customs agents have seized record amounts of cash - not only in vehicles but also hidden in children's toys, loaves of bread and body cavities.

But authorities are barely making a dent in the cartel profits. U.S. agents captured $85 million in illicit cash along the southwest border last year, according to the Department of Homeland Security. Mexican inspectors have seized $31 million in suspicious cash at all ports of entry into the country over the past three years, according to figures provided by the Mexican customs agency. In two years of undercover operations targeting Mexican cartels in the United States, the DEA seized $216 million, although it is unclear how much of that would have been smuggled south.

"We see mostly small seizures, in small denominations. It doesn't mean that much to them," said a senior Mexican official who investigates financial crimes, speaking on the condition of anonymity because of security protocols. "To really hurt the criminal organizations, we would have to be confiscating much, much more." Asked how much more, the official said, "a billion dollars."

T.J. Bonner, president of the union representing Border Patrol agents, said seizing cash in southbound traffic is extremely difficult.

"Throw a backpack of cash over the fence into Mexico, and what are we going to do?" he said. "Charge someone with littering in a foreign country?"

Mexican officials say a greater percentage of drug profits remain in the United States than U.S. officials acknowledge. Former attorney general Eduardo Medina Mora said that, based on the U.S. notes Mexican banks return to the United States, about $10 billion "does not have an explanation and could be attributed to the flow of drug trafficking money."

That figure does not include the billions never deposited in Mexican banks but quickly smuggled farther south - to Central America, to pay transport costs, and to Colombia, Peru and Bolivia, to purchase more cocaine.

'No paper trail'

Cash smuggled across the border is a leading source of foreign currency in Mexico, surpassed only by petroleum sales and about equal to the dollars earned from tourism and official remittances from Mexicans working in the United States.

"There's no paper trail when you smuggle $400,000 or $500,000 over the border in a hidden compartment on one car," said David Gaddis, deputy chief of operations for the DEA.

U.S. bank notes are easily spent in Mexico, where 67 percent of commercial transactions are made with cash - often dollars - as opposed to 21 percent in the United States.

Since late 2006, when President Felipe Caldern launched his U.S.-backed military-led offensive against the traffickers, police and soldiers have confiscated $411 million in U.S. currency but only $23 million in Mexican pesos, according to Mexico's intelligence service.

In the United States, cash from the wholesale distribution of heroin, cocaine, methamphetamine and marijuana is consolidated in several key cities, including New York, Atlanta, Chicago, Los Angeles and the Raleigh-Durham, N.C., area, before it moves south.

"What we are seeing is the professionalization of the movement of bulk cash," said an agent with U.S. Immigration and Customs Enforcement who spoke on the condition of anonymity because of security protocols. "We are seeing specialists in money movement. That's all they do. They prefer to lose drugs versus money because drugs are so much easier to replace."

ICE agents said cartels pay couriers about 2 or 3 percent to smuggle cash, far more than they lose to law enforcement.

At the crossing
At the busy border crossing in Laredo, U.S. customs agents search hundreds of southbound vehicles a day. Pickups and vans filled with household goods bought in the United States slow to a stop as agents ask the occupants whether they are carrying weapons, ammunition or more than $10,000 in cash. Almost everyone says no.

Many cars are just waved through. Others are briskly inspected. The officers tap on the vehicle panels with rubber mallets, searching for hidden compartments; open trunks and glove boxes; use mirrors to examine the undercarriage; hold a density meter next to the gas tank; and pop open the hood and inspect the running engine.

"We've seen hidden compartments in oil pans, with cars running on two quarts of oil instead of five," said Gene Garza, director of the Port of Laredo for U.S. Customs and Border Protection.

If agents detect anything suspicious - if a car with Arizona plates has no bugs on its windshield or a woman who claims to be the driver's wife looks nervous - the vehicle is inspected a second time, with cash-sniffing dogs. The vehicle might then be scanned by X-ray machines and disassembled.

In a typical seizure here last month, 50 bundles containing $607,629 were found in a spare tire of a Ford pickup. A few days earlier, $506,057 was discovered in a false compartment of a car's front bumper. The drivers face charges of cash smuggling, with a typical prison sentence of a year or two if convicted.

At the Laredo port alone, 22,000 cars cross into Mexico every day, plus 12,000 pedestrians and 6,000 tractor-trailers. They all can't be searched, officials say, and $1 million in $100 bank notes could almost fit in a shoe box.

Once the couriers cross, the risk of being caught is even slimmer, even as Mexico tries to overhaul its customs agency with help from the $1.6 billion in U.S. aid in the anti-narcotics Merida Initiative. Mexico has fired more than 1,000 customs agents and hired 2,300 since 2007, doubling their base salaries in an effort to ward off corruption. Inspectors are subjected to lie-detector tests, job rotations and monitoring by surveillance cameras.

But former agents say drug cartels continue to corrupt and intimidate inspectors. In Ciudad Juarez, across the river from El Paso, more than 30 agents have resigned in recent months after several co-workers were killed.

In Nuevo Laredo, a Mexican customs official said his inspectors have seized "maybe a million dollars" in the past year.

"It's not enough," said the senior officer, who spoke on the condition of anonymity because of security concerns. "They keep telling us to find more and more, but it's very hard."

Agents try to stop flow of drug money into Mexico
Linda Davidson-The Washington Post
















A Customs and Border Protection agent uses a cash-sniffing Dutch shepherd to search for drug money in a vehicle leaving the United States.















A woman leaves her vehicle as an agent inspects it for bulk cash at the port of entry in Laredo.















A U.S. Border Patrol agent looks for hidden bulk cash using a density detector called a "Buster" on the fender of a car.















Agents use a mobile X-ray truck to scan cars and buses for bulk cash as they enter Mexico.















If agents detect anything suspicious in an initial inspection (for example, if a car with Arizona plates has no bugs on its windshield or a woman who claims to be the driver?s wife looks nervous), the vehicle is inspected a second time, with cash-sniffing dogs. The vehicle might then be scanned by X-ray machines and disassembled.















A view of two ports of entry where U.S. border and customs agents check vehicles for bulk cash heading into Nuevo Laredo, Mexico, from Laredo, Tex. At the Laredo port alone, 22,000 cars cross into Mexico every day, plus 12,000 pedestrians and 6,000 tractor-trailers. They all can't be searched, officials say, and $1 million in $100 bank notes could almost fit in a shoe box.

21 comments:

  1. "they can't all be searched" officials say"
    BULL! Will we just swallow that illusion instantly? Just because some "Official" says so?
    This situation CALLS FOR IT. The POLITICAL WILL to DO IT is absent. For one, there truly are powerful people whom are wearing a sinister smile over all of this, because of the power shifts and grabs that can be orchestrated by allowing this to continue. THOUSANDS , perhaps MILLIONS of lives are tortured and destroyed by this trade and EVERY one of them is taken notice of. Whether the powers that be individually believe in a supreme , all powerful and all knowing BEING or not, THAT BEING EXISTS AND IS ABOUT TO STRETCH OUT A HEAVY HAND UPON THOSE WHOM ARE RULING MANKIND TO HIS INJURY. Thank GOD , that he has let us know the season in which he will act to destroy injustice on this earth. THAT SEASON IS UPON US!

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  2. That money must stink like a crack house itself. Give those bills a good cleaning before you put them in your pocket; you might catch a disease messing with that cash.

    If they could figure out how to take a larger percentage of the money THEN you might get somewhere in the War on Drugs.

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  3. As long as the CIA rendition planes are used by cartels this will never be stopped. To stop the importation of money drugs and people the CIA is going to have to be taken out of the equation.

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  4. yes they can stop the cash going south in vehicles al they have to do is bring israeli custom agents and israeli military police they do a excelent job in securing palestine

    ReplyDelete
  5. Wells Fargo etc...US LARGEST BANKS ARE NOT DOING THEIR DUTY REQ BY LAW TO CIRCUMVENT $$ LAUNDERING: http://www.bloomberg.com/news/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html _________________________ HOW TO RUN DRUG MONEY?...BE-A-LARGE-BANK There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,” Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught.” http://market-ticker.org/cgi-mt/akcs-www?archived-post=2460-How-To-Run-Drug-Money-Be-A-Large-Bank.html ___________________________ CHOP THEM AT THEIR KNEES.. COMPROMISE PROFITABILITY ENFORCE LAWS.. FUCK THE TIRE INSPECTIONS US BANKS AR IN COLLUSION VIA IMPUNITY Heartbroken but pissed.. Chivis
    By One HUGE component of responsibilty is..

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  6. We need to send American drug users, even the weekend casual user to the morgue where the 72 migrants were massacred, American drug users need to see what their drug use causes.

    Instead of jail, we should send American drug users to work with the Mexican army amd federales. Americans need to be educated on how their drugs get to market.

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  7. Frank, I doubt the average crackhead cares about what happens to their own children much less some migrants a thousand miles away.

    As others have pointed out, its unlikely that this much cash is coming back in bookbags and tires; there's got to be collusion between large banks on the US side and drug cartels. I also doubt you could provide enough cocaine, meth, heroin and weed to the state of California only using mules.

    There is a lot more corruption at high levels of the U.S. government than the average U.S. citizen cares to admit.

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  8. How many accountants have been arrested in Mexico ,the people who laundry $ They have been interrogated? What have they told the interrogators? What drop dead laws have been passed and enforced in Mexico to sieze the $ and property?? Take the profit it will reduce the influence reduce the no. of paid accompices.

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  9. Wells Fargo's Filty HouseAugust 29, 2010 at 4:07 PM

    @ 3:30

    I mean no disrepect but shouldn't we clean our dirty home before we are so accusatory of our neighbors? US banks are laundering with impuntiy. US Gov excuses this saying they have no resources to target the banks to comply w/laws. This is where the outrage should be...email-fax-mail-call this is an election year ripe for the "show"...

    If none of that makes you ill...try this link in Business Journal from Thurs. Wells contracted with Soriana-Banco Santander-Bancomer etc to double cash wires "going after W. Union! and bragging....

    Chew on this:
    http://www.bizjournals.com/denver/stories/2010/08/23/daily47.html?ana=from_rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+vertical_2+%28Commercial+Banking+Industry+News%29

    Paz...Chivis

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  10. The following is an excerpt from an AP article dated March 17, 2010:

    Wachovia to settle drug-money laundering case
    By Curt Anderson for the Associated Press (AP)

    MIAMI — Banking giant Wachovia Corp. will pay $160 million to settle a federal investigation into laundering of illegal drug profits through Mexican exchange houses in the largest case of its kind ever brought against a U.S. bank, prosecutors said Wednesday.

    "This is historic," acting U.S. Attorney Jeffrey Sloman said. "There is no other case like this one anywhere."

    The probe, which began in 2005 when a Drug Enforcement Administration narcotics dog in Florida detected cocaine traces in an airplane, ultimately uncovered at least $110 million in drug profits laundered from Mexico through Wachovia. The total settlement includes forfeiture in that amount plus a $50 million fine.

    "DEA will follow drug money wherever it leads us," said Mark R. Trouville, chief of the DEA's Miami office.

    The agreement means Wachovia and its executives will avoid criminal prosecution in return for the $160 million payment and significant improvements in its anti-money laundering program. If those and other conditions are met within one year, potential criminal charges for failure to maintain a system to detect money launderers will be dropped."

    Then link to the article:

    http://www.msnbc.msn.com/id/35914759

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  11. @ August 29, 2010 11:43 AM
    "yes they can stop the cash going south in vehicles al they have to do is bring israeli custom agents and israeli military police they do a excelent job in securing palestine"

    You are right!!! That is the problem in this country. Too much darn rights!!! for any little inspection at the border, people cry like little freaking babies.

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  12. a slap on the wrist for Wachovia.

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  13. WHat Wachovia? They are now Wells Fargo.. Wells is the biggest operated of cash wires to Mx....

    The buck starts here...

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  14. It may be comforting to single out American Banks.However the article, @August 29, 2010 1:21 PM, also mentions -

    "Wachovia is just one of the U.S. and European banks that have been used for drug money laundering."

    "Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc,"

    "A Mexican judge on Jan. 22 accused the owners of six centros cambiarios, or money changers, in Culiacan and Tijuana of laundering drug funds through their accounts at the Mexican units of Banco Santander SA, Citigroup Inc. and HSBC,"

    "The Smurfs"

    "Six months later, San Francisco-based Wells Fargo, which dates from 1852, bought Wachovia for $12.7 billion, creating the largest network of bank branches in the U.S. Thompson, who now works for private-equity firm Aquiline Capital Partners LLC in New York, declined to comment."

    It appears Wells Fargo is guilty of not checking Wachovia's books close enough before the buyout. When you buy a company you buy it's problems also.

    Asked why he robbed banks, Willie Sutton replied, "It's where the money is."

    The large sums of money exchanged precluded going to small banks. Go to a small bank and ask for a 100k loan - they get all kerfuffeled and precise, go to a big bank and do the same and they respond "Is that all?"

    There is also the affects of proximity.
    Why go to France when you can go to Mexico City or Oklahoma.
    - - Oklahoma?


    Worlds largest banks?
    http://answers.yahoo.com/question/index?qid=20061121140421AA2Uvax
    1 UBS Switzerland
    2 Citigroup United States
    3 Mizuho Financial Group Japan
    4 HSBC United Kingdom
    5 Crédit Agricole France
    6 BNP Paribas France
    7 ING Group Netherlands
    8 JPMorgan Chase United States
    9 Deutsche Bank Germany
    10 Royal Bank of Scotland Group United Kingdom

    12 Bank of America United States

    19 Banco Santander Central Hispano Spain

    35 Wachovia United States

    44 Wells Fargo United States

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  15. Mexicans ridiculous red light green light lottery system allows 95% of all vehicles to enter the country without any inspection. Six federal soldiers standing around in the hot sun, doing nothing. They could easily slow the flow of guns/cash into their country, if they started inspecting all cars. If I had a revolution going on in my country, I would start inspecting all vehicles. Somebody doesn't want it, othewise they would have gotton rid of the red lite, green lite lottery before now.

    Why should the USA hire people to inspect southbound cars, if the Mexicans don't do it.

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  16. gee i guess maybe out of the goodness of our hearts,,,,,,or how about to catch millions of illegal dollars goin south

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  17. @anyone/Everyone & @ 9:08

    I am very well aware that the cartels presently invest in 42 countries, most that welcome money without review or inquiry....BUT where do the funds originate? If halted they have no investment life beyond the US borders..

    I singled the US pragmactically;

    US IS THE CUSTOMER BASE OF MEXCIAN CARTEL....
    in the US; THE BUCK STARTS THERE
    to intercept drug funds where it begins all or dwarfs other components of laundering.

    I targeted Wells in particular as they are the largest and the most blatant abusers now going after western union, I blame them...
    but hold our government responsible...DC gives excuses lacking resources but going after not only punitive monetary funds AND accusition of drug funds would more than suffice.

    It is just my opnion but an educated one for reasons that are unimportant in a blog. however, I will say this...checking tires at US border exits for currency is a gross waste of money...going after violating banks makes sense.

    I blame the banks YES...I hold them legally, morally & ethically bankrupt!

    BUT...I hold the US government responsible

    Org. Crime exists for profit, compromise that and you solve much of the problem..they cannot get around the fact that this is their customer base, we are in ideal position to do something far more effective than what is proposed, far safer, and using existing laws.

    My staff and I make 1K enteries into Mx every year, I personally have been stopped only once in one year by US border when leaving the US..I say do better there but go after the banks.

    ReplyDelete
  18. PS...

    I have travelled the Laredo POE many times...
    I studied these photos and say the are bullshit..all but one, I am sure of, are US POE
    NOT Exiting...money would not be in the vehicle entering the US

    DC Spin

    ReplyDelete
  19. The only valid comparison of the current "certain drugs are illegal" situation is to alcohol prohibition from 1920-1933 in the US. Sure, there were tough, crime-busting crusaders like Elliot Ness, J. Edgar Hoover, the FBI and IRS, BUT the major weapon in destroying the structure of the illegal alcohol trade was its partial legalization under Federal and State control and regulation which continues today.

    All these feeble efforts at combating the illegal drug trade are doomed to failure, along with continuation of the violence at ever higher levels, until both MX AND US implement that weapon.

    ReplyDelete

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