Changes in Anti Money Laundering Laws in Mexico being Countered by Cartels

Not many experts in Mexico are willing or brave enough to discuss the country’s recently amendedanti-money laundering laws, designed to hamper the drug cartels from trying to legitimize their ill-gotten gains

The foot-dragging reticence is more understandable when you realize that it's about more than just hard feelings or toes stepped upon. Mexico is the largest transit area for illegal narcotics in the world. Northwards flow the tons of drug shipments into the United States, and southwards return bundles of cash and stacks of guns. This illicit trade which has grown and developed into a booming and highly profitable illicit industry is now annually worth well in excess of $40 billion - and counting.

Yet the days of chucking cash around like confetti to buy luxury goods and haciendas, and using so-called safe houses to stack from basement to rafters piles of high denomination banknotes, are numbered.

The new, more carefully tailored laws, which were designed to detect and curb transactions of illegal proceeds or the financing of terrorism, have some very strict parameters and curbs.

Banned transactions, in national or international currencies, include the sale of real estate or property valued at more than 520,000 pesos ($40,000). Boats, cars or planes over 200,000 pesos are on the list, which also includes anything from jewellery, precious metals, gems, watches to artwork.

Insurance and retail services, credit cards, pre-paid cards or a travellers' checks, when not offered by financial institutions, also fall under this category.

Implementing the law

Those who are charged with identifying what is termed the performance of vulnerable acts have to follow a clear set of obligations. These include: To identify clients or users, to retain documentation related to vulnerable activity for five years from the done deed, and to file relevant data to the finance ministry.

Alberto Elias Beltran has been appointed by the finance ministry to implement these laws. And he points out that they're specifically designed to cover the spectrum of money laundering, illegal funds, drug trafficking, arms trafficking and people trafficking. He explains that the aim is to better detect the operations and financial structures of organized crime to be able to squeeze and impact them.

He concedes that by the very nature of the beast, there isn't a methodology to determine just how much money is being laundered in a region, let alone a country. But the number of denunciations to the Attorney General's Office, arrests, convictions jail sentences and seizures of illegal funds by the state, are a reasonable benchmark to start with.

Mexico's drug cartels have been creative with their illicit trade in the past

Omar Fayad, President of the Mexican Senate's Justice Commission, says the new law does make life easier for law enforcement officials.

"If you watch how the money moves, you can do a lot of things, that's the reason Mexico's Congress approved this anti-money laundering legislation. If you can hit the drug cartels' economic power, then certainly their field of action is affected. But I think that they have the capacity to adapt to these new circumstances. That's why it's so important to modify legislation not just once. The government must be dynamic and willing to modify the legislation constantly. It's the first step combined with others to follow, in order to fight against the drug cartels in Mexico. But the cartels are like viruses. They have the ability to change and transform fast."

Tightening the loopholes

Ramon Garcia Gibson is the CEO of Garcia Gibson Consulting - a Mexican firm specializing in the prevention of money laundering and financing of terrorism. He says the new law tightens loopholes: "It establishes measures and procedures to prevent and detect operations involving resources of illicit origin. And definitely with this law, it's going to make life more difficult for organized crime because Mexican authorities will have information about transactions, which limits the use of cash from their illegal activities."

Accountant Jose Raul Alvarez Flores of ASI Contadores says estimates of how much money slips through the net annually add up to the equivalent of $10 billion. That also includes individuals and companies who avoid paying taxes, but the majority of the gigantic overall swindle boils down to the common denominator of organized crime.

It's not just the drug capo who's slammed down 3 million pesos or considerably more on the table to buy a house outright. This new law filters down as far as buying a quality watch or splashing out on jewellery. And the sanction of not complying, reporting and playing the game by the new rules is: "Go to jail, go directly to jail."

More cohesion

The new law also draws the relevant entities together into a tighter and more cohesive team spearheaded by the finance ministry, combined with the Attorney General's Office and with the closer cooperation of the banking industry.

As Ramon Garcia Gibson says, "it establishes a proper coordination between authorities responsible for preventing but also prosecuting money laundering."

All of this sounds like a good idea and appears to be making life more difficult for the drug cartels. But the cartels themselves count amongst their ranks specialists in finance, logistics, forward planning and business.

The days of focusing on cash transactions may be over as the cartels look for new options

One example is the notorious Arellano Felix drug cartel. Five of the seven brothers who ran it are under lock and key and two have been shot dead. Since the arrest of her brother Eduardo in 2008, Enedina, one of their four sisters and a university trained accountant, has taken over the illicit enterprise with her son Luis Fernando.

Accordingly, the focus is much more strictly applied to prudent business practice, financing and various sophisticated methods of money laundering to generate bigger profits.

Not surprisingly, the new methods do not focus exclusively on antiquated cold, hard cash. And the wanton first option of violence has also been refined and adapted. The new-found expertise is going to be considerably more difficult to disrupt and dislodge.

Michael Hearns an Anti Money Laundering specialist with over 27 years of AML experience can also be found at:www.launderingmoney.com and on twitter at :http://twitter.com/#!/LaunderingMoneyas well as his blog at:http://moneylaunderingworld.blogspot.com

Griselda Blanco Queen of Cocaine....hardly!

By Michael Hearns
http://launderingmoney.com


The recent murder of Griselda Blanco in Medellin Colombia closes a sad a and tragic chapter on the brutality of the cocaine trade. At least that is what many would like for you to believe.  Griselda Blanco's murder should be viewed for exactly what it is; another violent end to marginalized sociopath who has been given undeserved iconic status by the print and visual media.

Griselda Blanco was a sociopathic remorseless entrepreneur who slithered through a crevice in American law enforcement that was unprepared and without capable resources and foresight to recognize the tsunami of illicit dollars and power that was being ushered in through the cocaine trade of the 1980's and 90's. Griselda Blanco was an opportunistic individual who used her guile and sociopathology to insulate her as she trampled across the boundaries of decency in what we know to be an indecent business; drug trafficking. She has been given demigod status  for her harsh, abrasive, quick tempered, ruthless, conniving ways and her fast penchant for ordering the execution of those she opposed by her spineless groveling minions.  For all the bluster and for all the talk that that her hired henchmen now spout from the confines of this nation's penitentiaries they themselves had plenty of opportunity to dispatch Griselda Blanco but for either lack of conviction or lack of cerebral mass they  continued to carry out her murderous ways helping to support the fallacy of  Griselda Blanco as a Godmother of Cocaine.

Lets face facts. Griselda Blanco was an integral cocaine trafficker within the Medellin Cartel and she sanctioned, paid for, and demanded that many of her competitors, those who crossed her, and those who stood in the way of her ascension for wealth be murdered. Her distinction from her contemporaries was simply gender. Aside form that she is no different than many of the male drug traffickers who partook in their craft in the 1980's and 90's. As a society we lionize women villains because it grates against the American psyche of women being maternal, nurturing, and a source of comfort. Ma Barker, Bonnie Parker, Aileen Wournos, and Annie Palmer have all ascended to a folklore like status as queens or godmothers of crime and murder.

It is easy to view the life of Griselda Balnco from the viewfinder of a movie camera or the soft glow of a computer monitor and surmise she was the "Queen of Cocaine" or "The Godmother of Cocaine."  Not having the privilege of either but being one of the few who actually had his feet on the ground in the cocaine world for a long time  it is apparent to me that the reality is she was a large scale cocaine trafficker who clawed, cheated, and murderously existed in a business that rewards the victor regardless of the method.

Nothing more.
Nothing less.

The biggest current mistake being made is the assumption that Griselda Blanco was murdered  to settle an old score or to appease a long time  former adversary. More than likely it is because the criminal element of Medellin has been able to exist quietly in the shadow of the Mexican Cartel and Griselda Blanco's notoriety was becoming troublesome. Talks of more movies and books have filled the air. Crime and notoriety usually never mix well. In this case the celluloid film and the pen may have actually been stronger the sword.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney  and http://moneylaunderingworld.blogspot.com/  

New Mexico possibly new front line for drug trafficking and money laundering

By Leigh Irvin

Daily Times

Mexican drug cartels are operating at increased levels within San Juan County, and they steadily are becoming more violent, according to Region II Narcotics Task Force Director Neil Haws. Speaking to the Bloomfield City Council on Tuesday, Haws outlined recent trends within the cartels and warned that unless aggressive measures such as securing a federal magistrate in the area are taken, the picture looks bleak for stemming drug-related crime and violence. "Drugs and Mexican cartel activities are a real issue in Bloomfield," Haws said. "The cells are already here, and all of the problems that U.S. cities bordering Mexico are now dealing with are going to come this way. It's only a matter of time."

Cartel operations

Haws said that for the past two years the major Mexican drug cartel operating in San Juan County has been the Juarez cartel, but recently the Sinaloa and Michoacan cartels have gained ground.

"What's happening here is reflective of what's occurring in Mexico," said Haws, adding that Region II is concentrating its investigative efforts on individuals three or four levels above the drug addicts, or those who are directly connected to the cartels.Going deeper into how the cartels operate in Bloomfield, Haws said that four to five males are usually sent by the Mexican cartel to Bloomfield to live, and they spend 80 percent of their time in and around the city.The cartel members bring their families with them to try to fit into the community and to be less noticeable, and do not deal directly with drug addicts, which makes them difficult to detect. "These cartel members recruit local gang members to sell drugs to lower-level dealers, who then sell the drugs to the addicts," said Haws. Region II agents rely on background checks and surveillance to identify cartel members, and watch for signs like tattoos and the collection of religious artifacts like shrines.

Recently, the Sinaloa cartel has added Albuquerque as a stepping stone for its drug distribution in New Mexico, and much of the drugs coming into San Juan County are coming from Phoenix, passing through Albuquerque and then being transported into San Juan County via Highway 550. Drugs continue to be transported to the area from Mexico after going through California. Albuquerque is seeing more "enforcers," or cartel members who resort to kidnappings and violence on order of the cartel leaders in Mexico, Haws said. While some of the drugs reaching the county stay in the area and are sold to local drug addicts, much of the drugs are further distributed to other states such as Colorado, Utah, Missouri and the Dakotas. "We are definitely a distribution hub here," said Haws. Addressing why our area makes a good distribution hub, Haws said that the cartel members find it easy to import the drugs via wide-open New Mexico roads and reservation lands, and storage of drugs is also relatively easy here. Obtaining fake documentation is also easy to obtain in this area, despite Bloomfield taking away the ability of illegal aliens to obtain driver's licenses. "One of the best forgers in the area lives in Shiprock and works by the side of the road. For $30, it's possible for someone to get a whole new identity from this person," said Haws.

Drug trends

While Region II has seen a slight increase in the use and distribution of heroin, Haws says methamphetamine remains the drug of choice in San Juan County, and that 98 percent of the drug cases Region II works on involve meth.

What is changing, he said, is the purity of the meth coming into the county. "The purity here in San Juan County amazes the rest of the state," he said. "We're seeing 94-98 percent purity here, and one recent sample sent to the DEA lab was 100 percent pure. The DEA didn't even know this level of purity was possible." One of the challenges for local cartel members is getting the drug money back to Mexico. Bulk cash smuggling is one way to do this, but a relatively recent trend is to utilize money remitters such as Western Union and local businesses. "The cartels know how to stay under the radar, and they'll repeatedly wire $999 back to Mexico to avoid reporting requirements. Since no reporting is required for this amount, the transfers are hard to detect."

Drug-related crimes

Drug-related crimes such as kidnapping, homicide and money laundering are picking up in the county, says Haws.

One local family consisting of a father, an uncle and a cousin, were all recently kidnapped and taken to Mexico, according to Region II sources. The family members were never seen again, and are believed to have been killed.

"Crimes like these are usually perpetrated by the cartels against undocumented Mexican nationals, so it makes it hard to positively identify a lot of the victims," said Haws. The FBI has been involved in some of the Mexican-on-Mexican investigations, but without a U.S. citizen nexus, their hands are somewhat tied. "We're also seeing a lot of extortion cases," he said. "The cartel members might get a small local business to illegally transfer too much money on one occasion, then will extort them to continue the transfers, using the company's fear of getting into legal trouble." Other strong-arm methods of local cartels is to kick gang members out of their homes and move their own families in. "The gang family may be having some debt issues, and the cartel member will just say, get out, we're moving in,'" he said. Fear of cartel violence prevents others from fighting back or reporting these activities, making it difficult for Region II to secure witnesses and informants. Haws said money laundering is also "huge" in Bloomfield, and that the cartels are using small businesses like clothing shops to launder their drug money. Investigating and apprehending cartel-related individuals is an extremely dangerous business for Region II and other law enforcement officials. "We have to always be extremely careful, as each and every one of these guys has multiple guns, and they don't care about anything or anybody. Even though many of them have families here, they don't care as much about their wives or their kids as their money. They'll do anything for the money and to stay alive," said Haws.

Federal presence

"What we don't have in this county and what is desperately needed is a stronger federal presence," said Haws. While there is an effective FBI office in Farmington, much of the agents' responsibilities are devoted to investigating crimes on the Indian Reservation and they lack the manpower to fully tackle the cartel issues in the county. What is most needed, said Haws, is a federal magistrate. "We've been trying to get a federal magistrate here for years, and have shown through cases and sheer numbers that we have a serious drug problem here. A federal magistrate is warranted, but we're still fighting this battle." Despite the presence of a federal magistrate's office located in Durango, it can only be utilized only for Colorado cases unless an interstate nexus can be demonstrated. Some temporary help has come in the form of five Homeland Security investigators who have arrived to work with Region II for the next month, and they are reviewing many of Region's open drug cases.

A serious warning

Haws made an ominous prediction that Bloomfield will continue to see an increase in Mexican cartel presence and drug-related violence. "These people are already here in Bloomfield and in nearby towns, and although most of the violence has involved non-U.S. citizens, I believe it's just a matter of time before what's happening in the U.S. towns bordering Mexico will start to happen here, and our citizens will start to be affected more and more. The problem is here. It's real. And it's what we're dealing with every day," he said.

What can be done

At the conclusion of Haws' presentation, Bloomfield City Manager David Fuqua asked what the council can do to help, and asked if a resolution which could be taken to other officials, senators and pertinent groups would assist with efforts to secure a federal magistrate for the area.

"That would definitely help," said Haws. "Without a federal hammer' to help us with our efforts, we don't have the manpower or resources to keep going after the cartel once some are taken down. They just keep springing up and replacing each other." Mayor Scott Eckstein agreed that it would be productive to draft a resolution expressing the importance of a local federal magistrate, and Haws stated that he would provide the Council with additional statistical information needed to bolster the resolution's statement about the need for a federal magistrate. Haws has also been coordinating with Farmington officials and with the San Juan County Sheriff's Office to lobby for a federal magistrate, but stated that it would be a tremendous help if everyone could come together to try to work toward this goal. "Everyone has been doing what they can, but this is a huge problem. We just need to be aware of what we may be facing in the future." he said. Mayor Eckstein found Haws' presentation to be eye-opening. "I frankly found it a little alarming, as the activities Neil was describing are not things we see on a day-to-day basis," he said."If it's true, and I believe it is, the situation is worse than I thought it was. I think a resolution which we could get other elected officials to sign would be very effective, and if there's something else we can do to help, we'll do it." Police Chief Mike Kovacs agreed. "These cartel members are hiding in plain sight, and if we don't figure out a way to stiffen our laws within New Mexico, these cartel activities will start to affect all of us. Law enforcement is understaffed, and we're going to have to find a way to get ahead of the issue. I'm glad the city is taking a stance on this, and I look forward to working with the city to combat the problem," he said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at www.launderingmoney.com and on twitter at : http://twitter.com/#!/LaunderingMoney