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

ELITES AND CRIME / 16 DEC 2021

Two sons of former Panama President Ricardo Martinelli have pleaded guilty to criminal charges in the United States related to…

MÉXICO / 25 MAR 2022

According to the Mexican president, the recent arrest of the alleged leader of the Northeast Cartel followed by a major…

COLOMBIA / 29 OCT 2021

The fascination with “narco-culture” has taken over the entertainment and media industries: documentaries, TV shows, movies, podcasts, even a dedicated…

About InSight Crime

THE ORGANIZATION

InSight Crime Contributes Expertise Across the Board 

22 SEP 2023

This week InSight Crime investigators Sara García and María Fernanda Ramírez led a discussion of the challenges posed by Colombian President Gustavo Petro’s “Total Peace” plan within urban contexts. The…

THE ORGANIZATION

InSight Crime Cited in New Colombia Drug Policy Plan

15 SEP 2023

InSight Crime’s work on emerging coca cultivation in Honduras, Guatemala, and Venezuela was cited in the Colombian government’s…

THE ORGANIZATION

InSight Crime Discusses Honduran Women's Prison Investigation

8 SEP 2023

Investigators Victoria Dittmar and María Fernanda Ramírez discussed InSight Crime’s recent investigation of a massacre in Honduras’ only women’s prison in a Twitter Spaces event on…

THE ORGANIZATION

Human Trafficking Investigation Published in Leading Mexican Newspaper

1 SEP 2023

Leading Mexican media outlet El Universal featured our most recent investigation, “The Geography of Human Trafficking on the US-Mexico Border,” on the front page of its August 30…

THE ORGANIZATION

InSight Crime's Coverage of Ecuador Leads International Debate

25 AUG 2023

This week, Jeremy McDermott, co-director of InSight Crime, was interviewed by La Sexta, a Spanish television channel, about the situation of extreme violence and insecurity in Ecuador…