Thread: Drug war targets over-the-border cash flow

Drug war targets over-the-border cash flow

By James C. McKinley Jr. and Marc Lacey
THE NEW YORK TIMES
December 24, 2009

U.S., Mexican authorities try to make dent in billions of dollars they say are being smuggled

LAREDO - The streets of Laredo are awash in money, stacks of grimy bills tainted with cocaine residue, wrapped in plastic and stowed in secret compartments built into the trucks, buses and cars that flow south over the Mexican border daily like a motorized river.

Customs officials have discovered a host of ingenious hiding places, from $3 million secreted in the floor of a Mexican passenger bus to $1.6 million stuffed in duffel bags and balanced atop the heads of people wading across the Rio Grande to Mexico.

At border crossings and airports alone, American customs officers seized $57.9 million in the fiscal year that ended Oct. 1, up 74 percent from the previous year.

And once the money lands in Mexico, it is easily swept into a largely unregulated underground cash economy or laundered through seemingly legitimate businesses.

As the United States has tightened bank regulations and clamped down on sophisticated money-laundering schemes in the past 35 years, more of the money from illicit drug sales is being smuggled across the border to Mexico the old-fashioned way, law enforcement officials say.

American officials say stopping the bulk cash shipments and scuttling money laundering are essential to crippling the cartels in Mexico, which have unleashed a wave of violence that has claimed more than 15,000 lives since President Felipe Calderón began cracking down on their operations in December 2006.

But Mexican authorities have yet to make much headway against money launderers, and customs officials say the cash they seize is still a trickle of what flows across the border.

Joint operations of customs, border patrol and immigration agents set up checkpoints on southbound lanes every day, fishing for money.

Although U.S. authorities seized $138 million last year, that amount pales in comparison to the $18 billion to $39 billion a year the Drug Enforcement Agency estimates is being smuggled to Mexico every year.

"There is an enormous amount of money that is flowing undetected and uninterdicted," said John Morton, the assistant secretary for Immigration and Customs Enforcement. "We are trying to be a step ahead of the people moving the money. Unfortunately, right now we are a step behind."

On the border, federal authorities play a constant cat-and-mouse game with the traffickers. The dealers employ spies to spot checkpoints, while informants tip off agents about the movement of cash.

In Mexico, the cash is relatively easy to launder, law enforcement officials say.

Though the Mexican government has tightened bank regulations in the past nine months, drug cartels still buy real estate, businesses, automobiles, jewels and other luxuries in cash without any reports of suspicious activity being made to the government. The sellers then make giant but legal cash deposits to the banks, and the money flows into the economy, Mexican government officials and experts on laundering said.

"When the money is already integrated into the economy, it's very difficult to detect, and the players there are not obligated to report it," said Ramon GarciÂ*a Gibson, a consultant to Mexican banks on money laundering.

No one knows precisely how much money is shipped across the border, but Mexican authorities say cash smuggled illegally into their country and then sent back to U.S. banks through Mexican financial institutions totals at least $10 billion a year.

The lines between legal and illegal businesses remain fuzzy.

Last year, Saulo Reyes Gamboa, 37, a Mexican businessman and police official from Juarez, Chihuahua, was sentenced to eight years in an American prison for bribing an undercover federal agent in the United States to ship nearly 2,000 pounds of marijuana to El Paso. The American government seized nearly $20,000 in currency and a vehicle from Reyes but was unable to get access to most of his other Mexican-based businesses, including Subway franchises, a sushi restaurant and a radio station.

Drug cartels pay people to make money transfers through companies such as Western Union, or simply deposit money in American bank accounts and withdraw it from ATMs in Mexico. Other schemes involve moving money to shell companies, which then buy durable goods like bicycles in the United States and ship them to South America.

In a new trend, some organized crime groups have taken to smuggling prepaid money cards rather than cash, law enforcement officials say.

U.S. Treasury officials are working to require prepaid cards loaded with more than $10,000 to fall under the same reporting requirements as cash. Right now, anybody can walk or drive across the border with the cards filled with more than $10,000, without breaking any laws.

Federal officials acknowledge that they are hamstrung by the volume of traffic over the Mexican border, both legal and illegal. About 16,000 vehicles cross each way every day in Laredo alone, and customs officials say they do not have enough personnel to adequately police them.

Spies for smugglers easily locate checkpoints, federal agents say.

"We are always cognizant of spotters," said Gene Garza, the Laredo port director for Customs and Border Protection. "You just have to work around it. It's actually a game we play."

Smugglers often recruit drivers at truck stops to move cash, and keep them ignorant of the details, defense lawyers in Laredo said.

Yet even when couriers plead guilty, they are usually unable to help investigators learn more about how the money laundering or cartels work.

"A lot of these cases, we find that even with the guys who do cooperate, they don't know anything," Morton said. "These people are fodder in a larger war."

http://www.statesman.com/news/nation/dr ... =ynews_rss

Though the Mexican government has tightened bank regulations in the past nine months, drug cartels still buy real estate, businesses, automobiles, jewels and other luxuries in cash without any reports of suspicious activity being made to the government. The sellers then make giant but legal cash deposits to the banks, and the money flows into the economy, Mexican government officials and experts on laundering said.

Hello? The cartels OWN the banks too! The mexican govt profits from it too. They don't want it to stop.