US, Mexico Fail to Stem Flow of Drug Money South
Thursday, 26 Aug 2010 09:17 AM
Mexican drug cartels are moving tens of billions of dollars in
profits south across the border each year, according to a report
in The Washington Post.
U.S. and Mexican authorities are seizing just 1 percent of the
illegal cash flow, according to a Post analysis.
The Obama administration has proposed a $600 million ramp-up in
spending and personnel, including additional scanners and dogs,
to capture more of the cash going from U.S. drug users to
Mexican mafias.
Meanwhile, the drug traffickers and their suppliers smuggle $20
billion to $25 billion in U.S. bank notes across the southwest
border annually as they seek to circumvent banking regulations
and the flags sent up by large cash deposits.
"If we fail to curtail these money flows, the confrontation with
organized crime will generate more violence and more
corruption," Carlos Pascual, the U.S. ambassador to Mexico, said
at a border conference in El Paso this month.
Most of the money is smuggled in plastic-wrapped bricks of $20 bills.
Often the bank notes retain the sticky residue or fine powder generated
by the marijuana, cocaine and methamphetamine sold to the most voracious
consumers in the world.
"Cash is the ultimate challenge for us," John Arvanitis, chief of
financial operations for the Drug Enforcement Administration, said in an
interview. "It moves so rapidly, so fluidly. It crosses borders. It
moves in bulk. It is stored in warehouses. It is moved into business.
They have multiple, multiple options. They can hide a million dollars in
a tractor-trailer, or they can carry it across the border in a handbag."
Since the two countries pledged to bolster joint operations in March
2009 and began searching more vehicles heading south, customs agents
have seized record amounts of cash - not only in vehicles but also
hidden in children's toys, loaves of bread and body cavities.
But authorities are barely making a dent in the cartel profits. U.S.
agents captured $85 million in illicit cash along the southwest border
last year, according to the Department of Homeland Security. Mexican
inspectors have seized $31 million in suspicious cash at all ports of
entry into the country over the past three years, according to figures
provided by the Mexican customs agency. In two years of undercover
operations targeting Mexican cartels in the United States, the DEA
seized $216 million, although it is unclear how much of that would have
been smuggled south.
"We see mostly small seizures, in small denominations. It doesn't mean
that much to them," said a senior Mexican official who investigates
financial crimes, speaking on the condition of anonymity because of
security protocols. "To really hurt the criminal organizations, we would
have to be confiscating much, much more."
Asked how much more, the official said, "a billion dollars."
T.J. Bonner, president of the union representing Border Patrol
agents, said seizing cash in southbound traffic is extremely difficult.
"Throw a backpack of cash over the fence into Mexico, and what are we
going to do?" he said. "Charge someone with littering in a foreign
country?"
Mexican officials say a greater percentage of drug profits remain in the
United States than U.S. officials acknowledge. Former attorney general
Eduardo Medina Mora said that, based on the U.S. notes Mexican banks
return to the United States, about $10 billion "does not have an
explanation and could be attributed to the flow of drug trafficking
money."
That figure does not include the billions never deposited in Mexican
banks but quickly smuggled farther south - to Central America, to pay
transport costs, and to Colombia, Peru and Bolivia, to purchase more
cocaine.
'No paper trail'
Cash smuggled across the border is a leading source of foreign currency
in Mexico, surpassed only by petroleum sales and about equal to the
dollars earned from tourism and official remittances from Mexicans
working in the United States.
"There's no paper trail when you smuggle $400,000 or $500,000 over the
border in a hidden compartment on one car," said David Gaddis, deputy
chief of operations for the DEA.
U.S. bank notes are easily spent in Mexico, where 67 percent of
commercial transactions are made with cash - often dollars - as opposed
to 21 percent in the United States.
Since late 2006, when President Felipe Caldern launched his U.S.-backed
military-led offensive against the traffickers, police and soldiers have
confiscated $411 million in U.S. currency but only $23 million in
Mexican pesos, according to Mexico's intelligence service.
In the United States, cash from the wholesale distribution of heroin,
cocaine, methamphetamine and marijuana is consolidated in several key
cities, including New York, Atlanta, Chicago, Los Angeles and the
Raleigh-Durham, N.C., area, before it moves south.
"What we are seeing is the professionalization of the movement of bulk
cash," said an agent with U.S. Immigration and Customs Enforcement who
spoke on the condition of anonymity because of security protocols. "We
are seeing specialists in money movement. That's all they do. They
prefer to lose drugs versus money because drugs are so much easier to
replace."
ICE agents said cartels pay couriers about 2 or 3 percent to smuggle
cash, far more than they lose to law enforcement.
At the crossing
At the busy border crossing in Laredo, U.S. customs agents search
hundreds of southbound vehicles a day. Pickups and vans filled with
household goods bought in the United States slow to a stop as agents ask
the occupants whether they are carrying weapons, ammunition or more than
$10,000 in cash. Almost everyone says no.
Many cars are just waved through. Others are briskly inspected. The
officers tap on the vehicle panels with rubber mallets, searching for
hidden compartments; open trunks and glove boxes; use mirrors to examine
the undercarriage; hold a density meter next to the gas tank; and pop
open the hood and inspect the running engine.
"We've seen hidden compartments in oil pans, with cars running on two
quarts of oil instead of five," said Gene Garza, director of the Port of
Laredo for U.S. Customs and Border Protection.
If agents detect anything suspicious - if a car with Arizona plates
has no bugs on its windshield or a woman who claims to be the driver's
wife looks nervous - the vehicle is inspected a second time, with
cash-sniffing dogs. The vehicle might then be scanned by X-ray machines
and disassembled.
In a typical seizure here last month, 50 bundles containing $607,629
were found in a spare tire of a Ford pickup. A few days earlier,
$506,057 was discovered in a false compartment of a car's front bumper.
The drivers face charges of cash smuggling, with a typical prison
sentence of a year or two if convicted.
At the Laredo port alone, 22,000 cars cross into Mexico every day,
plus 12,000 pedestrians and 6,000 tractor-trailers. They all can't be
searched, officials say, and $1 million in $100 bank notes could almost
fit in a shoe box.
Once the couriers cross, the risk of being caught is even slimmer,
even as Mexico tries to overhaul its customs agency with help from the
$1.6 billion in U.S. aid in the anti-narcotics Merida Initiative. Mexico
has fired more than 1,000 customs agents and hired 2,300 since 2007,
doubling their base salaries in an effort to ward off corruption.
Inspectors are subjected to lie-detector tests, job rotations and
monitoring by surveillance cameras.
But former agents say drug cartels continue to corrupt and intimidate
inspectors. In Ciudad Juarez, across the river from El Paso, more than
30 agents have resigned in recent months after several co-workers were
killed.
In Nuevo Laredo, a Mexican customs official said his inspectors have
seized "maybe a million dollars" in the past year.
"It's not enough," said the senior officer, who spoke on the
condition of anonymity because of security concerns. "They keep telling
us to find more and more, but it's very hard."
boothb@washpost.com
miroffn@washpost.com
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