Mexico Struggles to Combat Money Laundering: Financial Crime Investigation Methods Under Scrutiny
Mexico’s efforts to combat money laundering have been met with limited success, according to a recent government report and other official documents. The country continues to grapple with the issue of illicit financial flows, which has serious implications for public security.
The Scale of the Problem
A classified Mexican government report obtained by Reuters highlights the high risk posed by illegal funds in Mexico, with estimates suggesting that the drug trade, tax fraud, and other criminal activities generate at least $58.5 billion annually. The report notes that while significant progress has been made since Mexico’s last Financial Action Task Force (FATF) evaluation in 2008, more needs to be done to combat money laundering.
Inadequate Investigations and Prosecutions
A separate report by Mexico’s Government Accountability Office (Auditoría Superior de la Federación – ASF) found that despite an increase in suspected cases of financial crimes, investigations and prosecutions rarely result in successful conclusions. The report also criticizes the special unit of the federal police tasked with preventing and combating money laundering for failing to take proactive measures.
Low Resolution Rates
The ASF report notes that while authorities have identified more “high-risk” money laundering suspects over the years, fewer than 5 percent of all cases filed in 2016 were resolved by the end of the year. Moreover, more than half of those cases were rejected due to improper filing.
Experts Weigh In
Experts argue that Mexico’s failure to effectively investigate and prosecute money laundering is creating a risk not only for the financial sector but also for public security. The report warns that deficient investigations and impunity in these cases are allowing criminal organizations to flourish.
Resource Allocation Issues
Insight Crime Analysis suggests that Mexico’s ineffectiveness in combating money laundering may be due to inadequate resource allocation, with significant funding dedicated to militarizing the fight against crime while investigative capacity has been neglected.
Targeting Criminal Organizations’ Financial Networks
Channing May, a policy analyst for Global Financial Integrity (GFI), emphasizes the importance of targeting criminal organizations’ financial networks. “We have to go after the money,” he said. “Any business, regardless of goods or services, they have to have money in order to function.”
Conclusion
Mexico’s struggle to combat money laundering highlights the need for a more comprehensive and effective approach to addressing this complex issue. It is essential to allocate adequate resources to investigative capacity and target criminal organizations’ financial networks to prevent further illicit financial flows.
Recommendations
- Increase funding for investigative capacity
- Target criminal organizations’ financial networks
- Implement a more comprehensive and effective approach to combating money laundering
- Improve resource allocation to address the root causes of money laundering in Mexico