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

GULF CARTEL / 19 JUL 2013

Mario Ramirez Treviño, alias X20, was the head of the Gulf Cartel, an organization that has trafficked contraband and illegal…

MEXICO / 21 JUN 2013

A newly formed community police group in Guerrero, Mexico has blocked a main highway, detaining 30 university students and 40…

MEXICO / 10 JUN 2013

One of Mexico's main political parties has withdrawn from local elections in Chihuahua state after candidates received death threats from…

About InSight Crime

THE ORGANIZATION

Apure Investigation Makes Headlines

22 OCT 2021

InSight Crime’s investigation into the battle for the Venezuelan border state of Apure resonated in both Colombian and Venezuelan media. A dozen outlets picked up the report, including Venezuela’s…

THE ORGANIZATION

InSight Crime Tackles Illegal Fishing

15 OCT 2021

In October, InSight Crime and American University’s Center for Latin American and Latino Studies (CLALS) began a year-long project on illegal, unreported, unregulated (IUU) fishing in…

THE ORGANIZATION

InSight Crime Featured in Handbook for Reporting on Organized Crime

8 OCT 2021

In late September, the Global Investigative Journalism Network (GIJN) published an excerpt of its forthcoming guide on reporting organized crime in Indonesia.

THE ORGANIZATION

Probing Organized Crime in Haiti

1 OCT 2021

InSight Crime has made it a priority to investigate organized crime in Haiti, where an impotent state is reeling after the July assassination of President Jovenel Moïse, coupled with an…

THE ORGANIZATION

Emergency First Aid in Hostile Environments

24 SEP 2021

At InSight Crime's annual treat, we ramped up hostile environment and emergency first aid training for our 40-member staff, many of whom conduct on-the-ground investigations in dangerous corners of the region.