A recent report describes how the Sinaloa Cartel used gold sales to move drug trafficking profits from the US back to Mexico, shedding light on a practice that has become heavily favored by some criminal groups in Latin America.
Court documents viewed by Bloomberg detail how Sinaloa Cartel operatives based in Chicago would use profits from drug sales to buy gold bars and jewelry in the area. The gold was then shipped via FedEx to a company in Florida, which melted down the gold and sold it for cash.
The Florida company would then keep 1 percent of the profits and send the rest of the money to a business in Mexico, Bloomberg reported. Operatives involved in the scheme would also falsify paperwork, making it look as though the Mexican business had legitimately sold the gold to their partners in Florida.
Members of the Sinaloa Cartel sent hundreds of boxes full of gold to the Florida company before US authorities raided the company's office outside of Miami in January 2014, Bloomberg reported. Sources consulted by Bloomberg said that authorities found evidence of the Florida company laundering funds for other drug trafficking rings as well.
The Sinaloa Cartel operatives in Chicago were charged with money laundering in 2015. According to a Department of Justice press release, they also used companies in California as part of the cash-to-gold scheme.
InSight Crime Analysis
As the Chicago case illustrates, there are multiple reasons why criminal groups have begun using gold as a means to launder illicit profits. The origins of melted gold are difficult to trace, and US companies that deal with gold face less scrutiny than institutions that handle cash transfers, according to Bloomberg.
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Criminal groups may have opted for cash-for-gold money laundering schemes after Mexico limited monthly dollar deposits in cash for Mexican businesses in 2010 (although Mexico partly reversed this measure in 2014). This move was meant to discourage criminal groups from making large transactions of drug dollars to Mexican banks, but instead it may have pushed the cartels into using other money laundering techniques, including setting up US-based front companies.
Using gold as a means to disguise dirty money has long been practiced by Colombian criminal groups. The ongoing popularity of this method may be one reason why illicit gold mining continues to thrive in places like Peru, according to a recent report on organized crime and gold mining by research group the Global Initiative Against Transnational Organized Crime.