Remittances and Money Laundering in Mexico

(Originally published at ISN Security Watch, Nov. 20, 2006 – picked up on Mexidata.info) – by Sam Logan ( Sam Logan is an investigative journalist who has reported on security, energy, politics, economics, organized crime, terrorism, and black markets in Latin America since 1999. As well, Logan is the Latin American correspondent for ISN Security Watch. He has just published his first e-book entitled “The Reality of a Mexican Mega Cartel”).

The need for financial literacy and bringing remittance users into the formal financial sector outweighs worries over money laundering or terrorism financing.

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In Mexico, there is currently some initiative to offer financial literacy programs, but security is a problem. Some 61 percent of households that receive remittances fall into the bottom 20 percent of non-remittance income.

They are poor families that in many cases live in areas controlled by Mexico’s narcotrafficking organizations, making it difficult for the government or other organizations to reach remittance users.

Narcotrafficking and Money Laundering: Narcotrafficking analysts, US Drug Enforcement Administration agents, and other security officials throughout the Americas generally agree that Mexican organized crime has a near monopoly on the lower half of the cocaine procurement chain that stretches from Colombian coca farms to street retailers in the United States. Colombian narco-traffickers tend to sell their cocaine to Mexican organizations, preferring to focus on coca leaf crops, cocaine production, securing transport between Colombia and Mexico, and managing money laundering operations. The Mexican traffickers focus on maintaining supply from Colombia, smuggling cocaine north of the border, and getting the money out. Money laundering efforts are largely initiated by Mexican actors, so it would seem that remittances play an important role in hiding the origination of illegal wealth. But money launderers prefer to employ bulk cash transfers. Cash packages are taped to human smugglers, who easily walk across the border from the United States to Mexico. In other cases, smugglers shovel cash into 40-foot containers, sending it back to Mexico on flatbed trucks.

Of the many methods used to launder money earned by the sale of cocaine and other drugs inside the United States, cash remittances are not the top choice for money laundering experts according to the treasury department. “The vast majority of illicit funds we see flowing from the United States to Latin America via remittances tend to be laundered proceeds,” US Treasury Department spokesperson Molly Millerwise told ISN Security Watch, adding that “while remittances can be used by bad actors to move money, they are generally not an efficient method for laundering.” Commenting on the formal financial sector’s other worry, terrorism finance, Millerwise said: “While there is believed to be terrorist financing in Latin America, remittances from the United States to Latin America are not a prevalent means for financing terrorism in the region.”

Growing Remittances: (Read the whole long article on above link).

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