Mexico’s Cash Deposit Restrictions Spark Shift to Trade-Based Money Laundering
A New Era of Money Laundering in Mexico
In 2010, Mexico introduced restrictions on dollar cash deposits as part of its efforts to combat money laundering and terrorist financing. However, a recent report by the US State Department suggests that criminal groups have adapted to these changes by embracing trade-based money laundering instead.
The Sinaloa Cartel’s Trade-Based Money Laundering Scheme
One notable example of this trend is the Sinaloa Cartel’s use of fashion businesses in Los Angeles for trade-based money laundering. According to reports, the cartel would allegedly export goods such as clothing and textiles to Mexico, then re-export them to other countries, generating profits that could be laundered back into legitimate businesses.
Panama Remains a Hub for Money Laundering
Despite making some advances in its anti-money laundering efforts, Panama remains a major hub for money laundering. The country’s limited regulation of bearer shares, which allow owners to remain anonymous, has long been a concern.
Challenges in Combating Money Laundering in Panama
However, the judicial branch in Panama still lacks the capacity to successfully prosecute and convict money launderers, according to the report.
South America’s Money Laundering Challenges
In various countries across South America, money laundering continues to pose significant challenges.
Argentina: Limited Progress in Combating Money Laundering
In Argentina, the US Treasury Department’s Financial Crimes Enforcement Network (FinCen) suspended information sharing with the country’s financial intelligence agency in June 2015 after allegations that Argentina used US financial intelligence for political purposes. Since 1999, only seven money laundering cases have been successfully prosecuted in Argentina.
Bolivia: Informal Economy Facilitates Money Laundering
In Bolivia, the size of the informal economy provides ample opportunities for money laundering via smuggled goods. While Bolivia’s financial intelligence unit has gained greater independence, there is less transparency when it comes to money laundering-related statistics.
Brazil and Colombia Struggle with Transparency
In some countries, lack of transparency hampers efforts to combat money laundering.
Brazil: Inadequate Data on Money Laundering Cases
In Brazil, lack of statistics makes it difficult to assess the country’s efforts in combating money laundering. The government does not maintain up-to-date numbers of money laundering prosecutions or convictions.
Colombia: Inefficient Process for Seizing Criminal Assets
In Colombia, investigations are hampered by a law that requires the financial intelligence unit to report only to the Attorney General’s Office, rather than other law enforcement bodies. The formal process for seizing criminal assets also remains inefficient.
Uruguay and Paraguay Make Progress
Some countries in South America have taken significant steps to combat money laundering.
Uruguay: Elimination of Bearer Shares
Uruguay has taken significant steps to crack down on bearer shares, eliminating about 85,000 of them in 2015 after owners failed to identify themselves. However, the country remains vulnerable due to its highly dollarized economy and other factors.
Paraguay: Creation of Anti-Money Laundering Unit
Paraguay took important steps in 2015, including creating an anti-money laundering unit within the Attorney General’s Office and passing a law requiring better regulation of bearer shares. However, the country is still considered a major money laundering hub, partly due to its giant contraband cigarette trade.
Venezuela’s Money Laundering Opportunities
Venezuela provides ample opportunities for financial abuse, according to the report. The country’s foreign exchange system and price controls, corruption, and porous border with Colombia all contribute to an environment conducive to money laundering. The black market exchange rate has also created many opportunities for money laundering.