Financial Crimes in the US-Mexico Border: New Trends and Red Flags Emerge

The Financial Crimes Enforcement Network (FinCEN) has issued a new advisory warning financial institutions of changes in illicit funds being moved through US financial institutions due to regulatory restrictions imposed on Mexican banks, exchange houses, and brokerages.

Shifts in Illicit Fund Movement

Since 2010, FinCEN has been monitoring trends in Bank Secrecy Act data and working with law enforcement and international partners to identify changes in the methods used by illicit actors to move funds. The advisory highlights recent shifts in techniques utilized by potentially illicit actors, including:

• Decline of Bulk Currency Smuggling: Illicit actors are moving away from bulk currency smuggling into Mexico.
• Emergence of “Funnel Account” Activity: Funnel accounts often involve customers structuring currency deposits into an account in one geographic area, followed by rapid withdrawals in a different location with little time elapsing between deposit and withdrawal. This activity has become increasingly common in southern California.

Red Flags to Watch Out For

The advisory identifies several red flags that financial institutions should be aware of:

• Multiple Wire Transfers: Multiple wire transfers initiated by casas de cambio directing U.S. financial institutions to remit funds to jurisdictions outside of Mexico that bear no apparent business relationship with that casa de cambio.
• Unusual Currency Deposits: Unusual currency deposits into U.S. financial institutions followed by wire transfers to Mexico inconsistent with expected customer activity.
• Attempts to Legitimize Large Deposits: Increased attempts to “legitimize” the source of large currency deposits by showing completed Report of International Transportation of Currency or Monetary Instruments forms to financial institution employees.
• Delivery of US Currency from Mexico: Deliveries of U.S. currency to domestic financial institutions made by armored car or courier services traveling from Mexico, followed shortly after by wiring funds to separate financial institutions or accounts, often in Mexico.

What Financial Institutions Should Do

FinCEN is urging financial institutions to be mindful of these changes and to continue monitoring customer and transaction activity for suspicious behavior. The advisory also reminds financial institutions that they are required to file a Suspicious Activity Report (SAR) if they know, suspect, or have reason to suspect that a transaction involves funds derived from illegal activity.

Reporting Suspicious Transactions

Financial institutions can report suspicious transactions related to terrorist activity by calling the Financial Institutions Toll-Free Hotline at 866-556-3974. Questions and comments regarding the advisory should be addressed to the FinCEN Regulatory Helpline at 800-949-2732.