Financial Crime World

Mexico’s Financial Crime Statistics Reveal Alarming Trends and Costs

The economic impact of crime in Mexico has reached unprecedented levels, with 2017 marking the country’s most violent year on record. The staggering 50% jump in homicides since 2015 has had a devastating effect on businesses, households, and the overall economy.

Indirect Costs of Crime

According to recent statistics, indirect costs associated with crime are likely to be substantial. Many businesses have been forced to:

  • Cancel growth plans
  • Reduce working schedules
  • Alter distribution routes due to security concerns

Micro enterprises, which account for over 95% of Mexico’s businesses, have been particularly hard hit:

  • 13% have canceled expansion plans
  • Almost a fifth (19%) have reduced working hours

Direct Costs of Crime

In addition to these indirect costs, the direct expenses incurred by households and firms as a result of crime are staggering. In 2017, these direct costs reached an alarming:

  • 2.5% of Mexico’s GDP
    • Household direct crime-related costs: 1.65% of GDP
    • Business direct crime-related costs: 0.9% of GDP

Impact on Large Corporations

Even large corporations are not immune to the effects of crime. For example:

  • Pemex, Mexico’s state-owned oil and gas giant, has seen a significant increase in illegal pipeline taps, with estimates suggesting that oil theft alone is costing the company:
    • $1.6 billion annually
    • Equivalent to approximately 0.14% of GDP

Human and Economic Costs

The severe human and economic costs of crime are taking a devastating toll on Mexico’s quest for higher living standards, lower poverty rates, and reduced inequality. The sheer magnitude of these costs underscores the urgent need for policymakers to prioritize fighting crime and implementing effective measures to reduce it.

Prioritizing Crime Reduction

To combat this issue, enhancing law enforcement and judicial institutions will be crucial in any policy package aimed at strengthening security in Mexico. Developing targeted strategies to combat criminal activity is essential for:

  • Restoring stability
  • Promoting economic growth

Mexico’s policymakers must take immediate action to address the alarming trends and costs of financial crime, ensuring a safer and more prosperous future for its citizens.