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Monday, November 6, 2017

Mexico report flags shortcomings in fight against corruption

Reposted by El Profe for Borderland Beat from Reuters

FILE PHOTO - A man keeps Mexican pesos inside a safe in Mexico City, Mexico, August 3, 2017. REUTERS/Edgard Garrido
by Stefanie Eschenbacher
MEXICO CITY (Reuters) - The Mexican government has noted serious shortcomings in its fight against corruption in a classified report seen by Reuters, which was prepared ahead of an international evaluation of the country’s efforts to combat money laundering. 

The undated government report estimated that the drug trade, tax fraud and other crimes were worth at least 1.13 trillion pesos ($58.5 billion) a year in Mexico, with all of that money susceptible to money laundering.

In October last year the government published a much shorter official version of the findings, which broadly described the risks of money laundering without going into detail.

The sum of illicit funds identified in the classified report was equivalent to 6.6 percent of the Mexican economy in 2014, when the data was compiled. It did not include an estimate of the value of corruption and several other crimes.

The 321-page report was prepared ahead of an evaluation of the country’s performance in preventing money laundering by the Financial Action Task Force (FATF), a global group of government agencies dedicated to tackling money laundering. 

“The view is that the risk represented by illicit funds susceptible to money laundering in Mexico generated within the jurisdiction is HIGH,” the report said, capitalizing the word.

The government said on Thursday the FATF evaluation, which is not yet public, showed Mexico had made “significant” progress in combating money laundering since the last evaluation in 2008. The FATF did not immediately reply to a request for comment.

The Mexican government report is the first of its kind, according to people familiar with it, and was assembled from official data and independent research.

Part of a broader investigation into illicit wealth in Mexico, the government concluded that Mexico needed “more efficient mechanisms” to prevent graft, including new laws that would complement the national anti-corruption architecture.

Reuters contacted the ministries of finance, economy and the interior, as well as the navy, the attorney general’s office and the central bank, all of which were identified as contributors to the report. All either declined to comment or did not reply.

The report urged the government to standardize laws at state level to iron out differences in how authorities deal with corruption, as well as improve collaboration between agencies tasked with implementing policy and collecting data.

Public policies should be overhauled to “better understand the phenomenon of corruption in Mexico,” the report said.

Graft scandals have for decades dogged the political elite in Mexico, which ranked 128th out of 137 nations for ethics and corruption in the World Economic Forum’s 2017-2018 Global Competitiveness Index.

President Enrique Pena Nieto has been criticized for referring to corruption as a “cultural” problem in Mexico. Civil society groups and opposition lawmakers said this downplayed the severity of the problem and the government’s role in fixing it.

In 2016, Mexicanos Contra la Corrupcion y la Impunidad, a civil group, calculated corruption was worth between 2 percent and 10 percent of Mexico’s gross domestic product, based on data from the World Bank, the International Monetary Fund and others.

Tax evasion and associated crimes accounted for the biggest source of illicit wealth identified by the study at 484 billion pesos ($25.3 billion), followed by trade in cocaine and marijuana at 404 billion pesos.

The report did not address income from heroin and methamphetamine, which make up a large chunk of the drug trade. Nor did it include white collar crimes such as embezzlement of public funds and insider trading, trafficking in people and arms, fuel theft and sexual exploitation.

While incomplete, the findings stand in contrast to the amount of illicit funds the government has said it removed from circulation in recent years.

According to government data, the organized crime unit of the attorney general’s office secured $11.4 million and 543.2 million pesos in its anti-money laundering efforts between September 2016 and June 2017.

($1 = 19.1472 Mexican pesos)
Reporting by Stefanie Eschenbacher; Editing by Dave Graham and Daniel Flynn


  1. Wow only $1.4 million recovered by anti-laundering squad?I'm pretty sure there was a lot more but the burning question is who got it and I'm also pretty sure no tax was paid on it.Yikes double whammy!

  2. Have to agree President Nieto it is a Cultural Problem. Just like the Corruption in the RGV. Domestic Growth Product between 2% and 10% I say 10%. It's big money for RGV and South Texas. Many businesses here are money laundering fronts. BUT do employ a lot of people. Legalized drugs would kill our economy.

    1. 3:57 hey, it's Tejas, pegado con Tranzaulipazz, the intimate excrementicious relationship made texas republican in the first place, as soon as LBJ was done with being errybody's president, after all they killed Kennedy to make him, LBJ, the president Mc Byrd of the US, behind them wholesale corruption came to the tejas trampalipazz border.
      National Bank of laredo, and the carlos hank rohn and their daddy carlos hank gonzales, stakes owned and fines paid by the hanks to the federales for their illegal deals on the US, home of the biggest money laundering and secret offshore billion dollar tax shelters, according to ICIJ leaks, lately known as Paradise Papers, Mossack-fonseca, Panama Papers, Swiss leaks, bcci and hsbc don't lag far behind...

  3. Damn when its something important no one comments i bet if it said chapo or mencho there would be 50-100 comments. BB great reporting.


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