Blog dedicated to reporting on Mexican drug cartels
on the border line between the US and Mexico

Monday, August 30, 2010

Mexico Targets Money Laundering with Plan to Limit Cash Transactions

By William Booth
Washington Post Staff Writer

MEXICO CITY - President Felipe Calderon proposed sweeping new measures Thursday to crack down on the cash smuggling and money laundering that allow Mexican cartels to use billions in U.S. drug profits to enrich their criminal organizations.

Legislation introduced by the Calderon administration would make it illegal to buy real estate in cash.

The new laws would also limit the purchase of vehicles, boats, airplanes and luxury goods to 100,000 pesos in cash, or about $7,700. Violators could be sentenced to five to 15 years in prison.

Criminals here are increasingly using cash transactions to launder their vast profits, according to a senior Mexican official who investigates financial crimes but spoke on the condition of anonymity because of security protocols.

The Mexican official and his counterparts in U.S. law enforcement say that billions of dollars in cash are used to buy airplanes, ranches and businesses to circumvent new Mexican laws that require banks to report large cash movements.

"This illicit money is vital for the criminal. That is what they seek, this money. It is also vital to finance their activities," said Calderon, who called the new money-laundering laws "unprecedented."

Mexican drug cartels and their Colombian suppliers generate, launder and remove from the United States $18 billion to $39 billion each year, according to the National Drug Intelligence Center. Most of this money crosses the Southwest border in plastic-wrapped bundles of $20 or $100 U.S. bank notes, stashed in tires and engine compartments of cars and trucks.

"In the criminal world, cash is king, and in Mexico you have to go after the cash if you want to disrupt their operations," said Jerry Robinette, a special agent in charge of the U.S. Immigrations and Customs Enforcement agency in San Antonio.

A recent report by Douglas Farah, a consultant for the Woodrow Wilson International Center for Scholars, concluded that "very little is effectively being done to either impede the movement of drug money into the formal economy or significantly reduce the flow of bulk cash across the U.S.-Mexico border."

U.S. and Mexican agents seize no more than 1 percent of this southbound cash, according to an analysis by The Washington Post, based on figures provided by both governments.

If passed by the legislature, Calderon's new money-laundering laws would upend common practice in Mexico, where many legitimate buyers and sellers prefer cash transactions to skirt tax bills.

As part of the $1.4 billion Merida aid initiative to Mexico, U.S. agents have trained their Mexican counterparts to detect and disrupt money-laundering operations.

The Mexican government in June announced strict restrictions on cash deposits and withdrawals made in U.S. dollars. Mexicans with bank accounts can deposit as much as $4,000 in cash per month, but Mexicans without accounts can exchange only $300 a day up to $1,500 a month. Businesses can move larger amounts of U.S. dollars but the new restrictions have faced tough opposition.

Calderon’s opposition supports money laundering initiative.
El Informador de Guadalajara

Calderon’s opposition in congress has issued statements of broad initial support for the set of money laundering initiatives introduced this past week to Mexico’s legislative body.

According to lawmakers the proposed legislation will be discussed during the session that runs from September to December 31.

However, deputies and senators from the Institutional Revolutionary Party (PRI) of the Democratic Revolution (PRD), Labor (PT) and even the President’s National Action (PAN) warned that even though the initiatives carried “great relevance" there are weaknesses that will be addressed as the legislative process moves forward.

The legislators stated that farmers, ranchers and small and medium size entrepreneurs and merchants who carry out their transactions mostly with cash not be penalized by the money laundering initiatives.

Senator Tomás Torres Mercado summed up the opposition’s stance: "We will work to ensure that the laws do not transfer to the citizen the burden of proof to establish the origin of their money."

The PRI Governor of the State of Mexico and current frontrunner for his party’s Presidential nomination in 2012, Enrique Peña Nieto, welcomed the initiative because "it puts a lock on the proceeds of drug trafficking."

In a media interview the outspoken PRD governor-elect of Sinaloa, Mario López Valdez, said he considered the bill to combat money laundering is a valuable tool in the fight against organized crime. “The proposals by President Felipe Calderón are the tool that was lacking to comprehensively combat organized crime."

He called on federal legislators to find a consensus on the initiatives that transcends partisan politics and offer a real commitment to a society that is crying out for peace and tranquility in the country.

He explained that the Legislature is obligated to provide legal instruments to the federal executive, to be successful in the fight against drug trafficking and organized criminal gangs.


  1. Requiring $ to be deposited and checks written so that a clear paper trail exists,international wire transferes recorded thru a clearing house, alowing siezure of $ and property, it would seem that if the govt can profit greatley if such laws are implemented, then maby the Mx enforcment branch could be effective and enthusiastic??

  2. Its the economy stupidAugust 30, 2010 at 8:34 AM

    Agree to an extent but all banks use a "clearing" bank for wires, the oversight is needed as nothing in place for the review...give to the IRS they are the most trained "dogs" ..but really the laws in place would work they simply must be enforced...10K and above in cash constitutes lengthly form sent to DC into a big hole because few resources


  3. Really??? Let me get this straight. The corrupt politicans are going to write a law governing cash deposits??? They can't even enforce the law prohibiting murder!!

  4. This is a stupid law, it won't help them, they will simply move their money out of Mexico and spend it somewhere else.

    Marijuana needs to be legalized in the US first, and Mexico needs to Nationalize its sale and production to the US - use the profits to rebuild the schools, homes, and lives that were destroyed by illegal drug trade. Make drug trade legal! End the violence!

  5. ...of course you used the term "dogs" as a "tip of the hat" for the IRS's effectiveness in enforcing the tax laws against deadbeats. The trained dogs you refer to enforce the laws that your elected congress gets through conference and passes the test of getting an executive's signature. So, if you, or anyone has a problem with following the fiscal code, then all you need is to look at us to be reminded that the alternative is to start down the path of tax evasion, lawlessness and graft; we have more than our fill in Mexico. I wish we had such an agency in Mexico (that is feared and respected) as the IRS is in the US; instead we have "La Cultura del No Pago" for everything from utilities to income tax. The avoidance and skirting of these and other laws is what makes of our country a banana republic; following the law is optional if one has palanca.

    If hypocrite conservatives want to live out their fantasy and see what life would be like without the burden of "government" they can move to Mexico anytime; please do.


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