Mexico’s Record-Breaking Remittance Inflows Pose Money Laundering Risk: Experts

As Mexico receives a record-breaking $28 billion in remittances from the United States during the first seven months of 2021, experts warn that organized crime groups are exploiting these transfers to launder ill-gotten proceeds.

A Record-Breaking Surge

The figure represents a 23 percent increase from the same time period last year and is on pace to surpass the previous record of $40 billion set in 2020. According to official data from Mexico’s Central Bank (Banco de México – Banxico), remittances sent from the United States have consistently increased despite a small drop in April 2020, following the WHO’s declaration of the COVID-19 pandemic.

A Growing Concern

Experts highlight the risk of money laundering as organized crime groups adapt their tactics amid the global health crisis. Mexico has more emigrants living in the United States than any other country in Latin America, with 97 percent of international migrants born in Mexico residing in the US, according to Pew Research Center analysis.

A Significant Opportunity for Criminal Organizations

This large diaspora presents a significant opportunity for criminal organizations to exploit remittances and launder money through US banks. The US Justice Department has previously revealed that Mexican crime groups have long co-opted remittances sent through US banks for their own interests, using bulk cash deliveries and other techniques to move illicit proceeds across the border.

A Lack of Effective Controls

Despite this, US prosecutors found that fewer than 10 investigations were conducted and only nine Suspicious Activity Reports (SARs) were filed during the same period. More recently, Mexican crime groups have had to adapt their money laundering techniques amid financial disruptions caused by the pandemic, using methods such as bulk cash deliveries, wire transfers, and structured deposits.

A Continuing Risk

Experts warn that the lack of effective controls at US banks will continue to pose a risk for money laundering in Mexico so long as remittances remain a key tool for criminal organizations.