Revelations that the Jalisco Cartel laundered hundreds of millions of dollars through front companies posing as tequila vendors are the latest chapter in a longstanding relationship between Mexico’s criminal groups and the country’s iconic liquor.
On June 2, Mexico’s Financial Intelligence Unit (Unidad de Inteligencia Financiera - UIF) announced it had frozen nearly 2,000 bank accounts linked to the Jalisco Cartel New Generation (Cártel de Jalisco Nueva Generación - CJNG).
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At first glance, the impact of this operation was difficult to estimate, as seizures of bank accounts linked to criminal activity in Mexico are not uncommon.
But here, the operation’s true target was foreshadowed in its name, “Blue Agave” (Agave Azul), the type of cactus used in the production of tequila. The UIF named 1,770 people and 167 companies as being part of a complex ring to launder the CJNG’s criminal proceeds through front companies passing as tequila businesses.
And the ring succeeded in moving massive sums of drug money. The UIF reported domestic transactions within Mexico worth about $666 million, international transfers worth $330 million and $137 million in suspect cash transactions made in US dollars.
While the UIF statement did not reveal much about the front companies, the CJNG and its financial arm, known as Los Cuinis, are known to have owned at least one tequila producer. In 2015, the US Treasury Department listed Onze Black, a tequila company in Jalisco, as being linked to the CJNG. Later investigations found Onze Black was owned by Jessica Oseguera, daughter of CJNG leader Nemesio Oseguera Cervantes, alias “El Mencho.”
InSight Crime Analysis
The tequila industry offers an ideal set of circumstances to be a money laundering partner of choice for criminal groups. It is hugely lucrative, worth an estimated $4.6 billion worldwide in 2019 and is continuing to grow. Eighty percent of production goes to the United States, still a destination of choice for drug traffickers trying to hide their wealth. And its raw material, the blue agave, is grown in some of Mexico’s most dangerous areas, making producers ideal targets for extortion and kidnapping.
SEE ALSO: Jalisco Cartel News and Profile
The CJNG is far from the first drug cartel to be connected to the tequila industry. In 2006, the Arellano Félix Cartel was found to be using a tequila brand, 4 Reyes, to wash drug proceeds in Mexico and the United States. In 2013, the US Treasury Department blacklisted several businesses, including two tequila companies, belonging to a drug trafficking group known as Los Güeros, according to a news release.
Beyond these direct criminal links, tequila is also a broader part of “narco-culture” in Mexico. In February 2020, Alejandrina Guzmán, the daughter of Joaquín Guzmán Loera, alias “El Chapo,” launched El Chapo 701, a tequila brand, as part of her line of products using her father's notorious image and name.
The UIF has uncovered by far the largest scheme to date to launder money through tequila brands. This will hopefully lead to greater long-term scrutiny by both US and Mexican authorities. But given how criminal groups have co-opted most of Mexico’s exports, from avocadoes to cars, this may not be enough.