HomeNewsBrief'Funnel Accounts' Newest Money Laundering Trend for Mexico's Cartels
BRIEF

'Funnel Accounts' Newest Money Laundering Trend for Mexico's Cartels

MEXICO / 2 JUN 2014 BY KYRA GURNEY EN

Authorities in the United States have alerted banks to the use of "funnel accounts" in trade-based money laundering, the latest scheme in an extensive arsenal of operations employed by Mexico's drug cartels to legitimize their illicit funds. 

On May 28, the US Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued an advisory (pdf) warning banks that criminal organizations are using these accounts to skirt restrictions on US dollar deposits in Mexico. The method allows narcos to exchange US currency for Mexican pesos that appear to come from legitimate business activities. 

According to FinCEN, this scheme typically begins with criminal organizations hiring someone to open a US bank account that can receive deposits in branches in multiple states.

Once the account has been set up, various individuals working for the criminal organization deposit cash into this account -- often in places far from where the account was opened -- in amounts below $10,000, to dodge identification and transaction report requirements. An intermediary then uses wire transfers or checks to purchase goods with these funds, which are shipped to foreign countries and sold. The profits are transferred back to the Mexican criminal organizations. 

InSight Crime Analysis

An estimated $19 to $29 billion is sent back to Mexico's cartels every year from US drug sales. However, getting this money into the country without attracting the attention of financial institutions or government authorities is a complex logistical task for the cartels, and one that has become increasingly difficult. 

In 2010, the Mexican government issued restrictions (pdf) on the amount of US dollars that could be deposited into Mexican banks and on the use of US cash at exchange houses and brokerages. These regulations were designed to limit money laundering options for cartels, which previously often used "casas de cambio" to deposit large sums of hard currency. 

SEE ALSO: Coverage of Money Laundering

These regulations, along with other measures passed in recent years, have forced cartels to develop more creative methods of laundering US drug proceeds. The use of "funnel accounts" in trade-based money laundering is only the latest in a long list of schemes.    

Over the past few years, criminal organizations have been caught using a myriad of activities to disguise the source of their funds. Mexican cartels have used prepaid cards, opened horse breeding businesses, and robbed gold trucks, to name just a few. 

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

COVID AND CRIME / 19 AUG 2021

The number of human trafficking victims in Mexico is growing, as traffickers target vulnerable people hit hard by the COVID-19…

GULF CARTEL / 15 MAR 2022

Mexican armed forces have captured the reported leader of the feared Northeast Cartel, but this arrest may only stoke further…

ARGENTINA / 7 MAY 2021

The cat-and-mouse game of evading law enforcement was taken literally by drug smugglers recently in Panama, who hid cocaine on…

About InSight Crime

THE ORGANIZATION

‘Ndrangheta Investigation, Exclusive Interview With Suriname President Make Waves

2 DEC 2022

Two weeks ago, InSight Crime published an investigation into how Italian mafia clan the ‘Ndrangheta built a cocaine trafficking network from South America to ‘Ndrangheta-controlled Italian ports. The investigation generated…

WORK WITH US

Open Position: Full Stack WordPress Developer

28 NOV 2022

As Full Stack WordPress Developer You Will: Work collaboratively with other developers and designers to maintain and improve organizational standards.Demonstrate a high level of attention to detail, and implement best…

THE ORGANIZATION

Join Us This #GivingTuesday in Exposing Organized Crime

24 NOV 2022

For over twelve years, InSight Crime has contributed to the global dialogue on organized crime and corruption. Our work has provided policymakers, analysts, academics, journalists, and the general public with…

THE ORGANIZATION

Like Crime, Our Coverage Knows No Borders

18 NOV 2022

The nature of global organized crime means that while InSight Crime focuses on Latin America, we also follow criminal dynamics worldwide. InSight Crime investigator Alessandro Ford covers the connections between Latin American and European…

THE ORGANIZATION

Using Data to Expose Crime

11 NOV 2022

Co-director Jeremy McDermott made a virtual presentation at a conference hosted by the United Nations Office on Drugs and Crime (UNODC). The ‘Sixth International Conference on Governance, Crime, and Justice…