Wednesday, March 3, 2010

The State Department on Money Laundering

Here's what the State Department had to say about Mexico's anti-money-laundering activities:
Under the Law of Credit Institutions, Mexican financial institutions, including banks and other financial institutions (including mutual savings companies, insurance companies, securities brokers, retirement and investment funds, financial leasing and factoring funds, casas de cambio, and centros cambiarios) must follow know-your-customer rules. Regulations require enhanced due diligence for higher-risk customers including politically exposed persons.


From 2006 through 2009, authorities have obtained 90 convictions for the offense. In December 2009, Mexican authorities arrested 11 suspected money launderers during raids on 17 finance companies in the northern cities of Culiacan and Tijuana. According to authorities, the money laundering ring operated through a series of companies, some of which posed as authorized financial institutions while others were simply shell companies.


The lack of personnel—including more field investigators, prosecutors, and auditors- monetary resources, a comprehensive and modern database, technological equipment, as well as the vulnerability of its facilities undermine prosecution efforts.
The whole section leaves you with the impression that the legal tools at the disposal of Mexican law enforcement are more than sufficient, and that the reason for the lack of attention to dirty money is some combination of lack of political interest or will and a lack of resources. I can only assume that's even more true in light of the new asset-seizure law that seems to have been used very sparingly. By the State Department's own estimate, somewhere between $32 and $100 in drug money has made its way back to Mexico in the four years in question, and the Mexican government can't even arrest (which in Mexico is very different from "convict", mind you) 25 people a year? That's laughable. It's a tricky problem, because the distinction between clean and dirty money in Mexico is not a neat one, and a truly determined drive to punish money-laundering would necessarily step on a lot of essentially legitimate toes.

At the same time, considering that Calderón's crime policies are supposed to be more aggressive than any previous president's, what does arresting tens of thousands of low-level dealers amount to if you aren't touching the financial system that they are a part of? That's like declaring total war and then deciding not to use your air force. There may be a good justification for it, but it ain't total war.

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