On money laundering. We call for governments on both sides of the border to take concrete steps to combat money laundering. We propose that financial institutions be held accountable for preventing money laundering through increased government surveillance, investigations, fines and criminal charges. We also call for the Treasury Department to immediately implement Congress’ 2009 call to close the “prepaid/stored value cards” loophole.
Binational diagnosis
U.S. drug consumers exchange billions of dollars to the Mexican criminal organizations each year. This money fuels violence and is used to strengthen criminal organizations. In spite of legislation against money laundering, income is still circulating in the financial system flow without effective controls. In 2008 the U.S. National Drug Intelligence Center (NDIC) estimated that between $19 billion and $39 billion in illegal drug proceeds flows from the United States to Mexico each year. The sheer volume of funds flowing across the border proves how serious the problem of money laundering and bulk cash smuggling between the United States and Mexico is, but the broad range of the figures points to how little we know. However, one thing is certain: money laundering is not a victimless crime. This enormous flow of money finances the criminal activity of Mexican drug trafficking organizations and makes possible the extraordinary levels of violence carried out in Mexico today.
There is broad consensus among law enforcement that an important way to weaken transnational criminal organizations is to cut off their funds. Yet nearly six years into the fight against Mexico’s criminal organizations, a strategy to target and dismantle the flow of money into cartel pockets is only beginning to develop, and it is far from a coordinated or effective approach. Agencies responsible for enforcing money laundering law include the FBI, DEA, ICE, IRS – Criminal Investigations, and the U.S. Postal Inspection Service. Compared to counternarcotics military and police aid to Mexico, anti-money laundering efforts are grossly underfunded, understaffed, and all-around under-resourced. In 2010, the Drug Enforcement Administration (DEA) captured about $1 billion in cash and drug assets on borderline premises, a small percentage of the estimated $19 to $39 billion in drug money that slips through the U.S.-Mexico border each year.
There are a variety of ways that criminal organizations move and launder money, for example: 1) Bulk Cash Smuggling, 2) Traditional Banking/Wire Transfers, 3) Trade-based money laundering, and 4) Stored value cards – Stored valued and prepaid access cards, among others.
Former Arizona Attorney General Terry Goddard is a leading voice for following the money in the fight against organized crime. During his term as state attorney general, Goddard cracked down on money laundering and reached a $94 million settlement with Western Union for their role in turning a blind eye to drug cartels’ use of wire transfers. Goddard notes that, “in general the failure to combat money laundering is not a result of inadequate laws, but a result of inadequate enforcement of laws that already exists. Huge amounts of illicit flows of money could be stopped if financial agencies and governments policed unlawful or questionable behavior.” And as the Washington Post notes, “while President Obama has boasted of ‘putting unprecedented pressure on cartels and their finances,’ the U.S.-Mexican effort has produced little in the way of arrests or seizures.”
SOURCES: NDIC, National Drug Threat Assessment 2009/ Celina B. Reayulo, It’s All about the Money: Advancing Anti-Money Laundering Efforts in the U.S. and Mexico to Combat Transnational Organized Crime, Woodrow Wilson Center, mayo, 2012/ Douglas Farah, Money Laundering and Bulk Cash Smuggling: Challenges for the Mérida Initiative, Working Paper Series on U.S.-Mexico Security Cooperation, Woodrow Wilson Center; Trans-Border Institute, University of San Diego, 2010/ Terry Goddard, “How to Fix a Broken Border: Follow the Money”, Immigration Policy Center, mayo 2012./ William Booth and Mary Beth Sheridan, “U.S., Mexico press effort to freeze kingpins’ cash,” Washington Post, 26 May 2011.
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