ST. LOUIS, (Thomson Reuters Accelus) – Mexican drug cartels are using armored-car firms to help shield their efforts to smuggle and launder billions of cash dollars into legitimate-looking business profits, U.S. authorities believe, and financial regulators are seeking to crack down.
The U.S. Treasury’s anti-money laundering unit, the Financial Crimes Enforcement Network (FinCEN), is preparing guidance for banks on how they should report receipt of large sums of cash from customers via armored-car deliveries, a Treasury official said. Current reporting practices have allowed for gaps in tracking the money.
The goal is to give law-enforcement authorities access to better information about the people involved in large cash transactions, which increasingly include large sums of currency repatriated having been smuggled to Mexico by drug traffickers eager to hide their source.
“Based on some of the activity we’ve seen as a result of the currency restrictions in Mexico, the activity of armored-car companies and the different business models that they use, we’ve begun to think about how we should be dealing with that industry as a whole,” said FinCEN official Jamal El Hindi.
U.S. authorities estimate that cartels smuggle tens of billions of dollars across the U.S.-Mexico border every year. U.S. anti-money laundering rules make it hard for cartels to deposit large sums of cash generated by illicit drug sales in the United States directly into U.S. banks.
So the cartels smuggle the cash into Mexico and turn it over to money launderers who own or control front companies such as money changing outfits that can claim the cash as legitimate business proceeds.
The money launderer then ships the cash to the United States, either by plane or armored car, so that it can be deposited into a U.S. bank account belonging to a seemingly above-board Mexican business.
If the U.S. bank receiving the cash does not collect sufficient information from the armored-car firm it becomes harder to determine the origin of the funds.
Concerns about the use of armored cars grew after Mexican banking regulations in late 2010 limited domestic deposits of U.S. dollars. That measure was aimed at weakening the cartels, which are engaged in open warfare with the Mexican government.
Those regulations have compelled the drug cartels to return more of their cash to the United States under the guise of legitimate commerce, according to a FinCEN advisory issued last year and interviews with former law enforcement officials.
In carrying out such laundering, U.S. banks are feared to be unwittingly accepting drug-money overflow via armored car deliveries originating from Mexico as well as U.S. cities along the border.
A $2 MILLION SEIZURE
The role of armored cars was highlighted last March when U.S. Homeland Security agents seized $2 million from a company called Rochester Armored Car in the South Texas border town of Pharr, a suburb of McAllen. The company has not been accused of wrongdoing.