Tuesday, May 24, 2011

How Drug Cartels Move Cash Across The U.S.-Mexico Border

The cartels make billions of dollars on the drug trade. But they have to work out complicated schemes to get those dollars they make from addicts in the United States back into Mexico and convert them into usable pesos. It's a lot of money. And money can overcome lots of challenges. A recent investigation by U.S. authorities found that between 2004 and 2007, one large U.S. bank allowed nearly $500 billion of drug money to be wired through its systems, no questions asked. Many of the wire transfers ended up in Culiac├ín, Sinaloa, the place to go to cash out American greenbacks for pesos in Mexico's organized crime capital. Experts describe it as a violent city along the Pacific Coast with a long history of drug trafficking. The biggest money laundering case has been that of North Carolina-based Wachovia Bank. Investigators found that the bank had allowed $378 billion to flow unhindered from “casas de cambio” right into its bank accounts in the United States. Michael McDonald is a retired IRS investigator. He laid the groundwork for much of the organized crime and bank investigations done today. Now he's an anti-money laundering specialist who works with banks. The way the money was laundered was fairly simple: The drug traffickers used the Mexican “casas de cambio” as their middlemen. The money was smuggled into Mexico and deposited into the houses. Then, when the traffickers needed to buy items in the United States, the money house would transfer the funds into their own accounts at Wachovia. Criminal proceedings were brought against Wachovia but nobody was ever arrested. Instead, Wachovia paid a fine – $160 million. Or, about 5 percent of the money laundered...more

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