Calderón Takes Aim at Money Laundering

Cecilia Farfán Méndez
August 31, 2010

U.S. cash seized in Mexico that was tied to drug trafficking. (AP Photo)

Mexican President Felipe Calderón sends his fourth state of the union to Congress September 1 at a point when some observers see the security outlook as gloomy at best. On top of the brutal, headline-grabbing gangland slaying of 72 migrants,  Mexico has become the world’s deadliest country for journalists  and the offensive against cartels has claimed roughly 28,000 lives since it began over three and a half years ago. With these grim facts in sight—and a new poll showing 73 percent of Mexicans are dissatisfied with the anti-trafficking strategy—Calderón has sent a new bill aiming to combat organized crime at its base by stemming the money laundering that finances its operation. Even as analysts welcome the initiative, some view it as long overdue.

Mexico’s cartels pull in illicit funds from the United States to the tune of between $18 billion and $39 billion, according to the Federal Bureau of Investigation.To cap the circulation of this cash, Calderón’s new component of the National Security Strategy will require businesses and individuals to declare purchases of real estate and some luxury goods—such as armor plating and jewelry—that exceed costs of $7,700. The proposal also seeks to punish accomplices, including even distant relatives and other persons who participate in money laundering operations by ignoring the origin of the funds when they had the means to verify them.  Aside from dealing a potential blow to cartels, the measure could spur increased use of banking in a country where approximately 75 percent of transactions are done in cash.

Attacking the finances of powerful cartels is, for Calderón, the way to “put an end to the use of resources that come from kidnappings, extortions, drug trafficking, or any other criminal activity.” But not everyone shares Calderón’s optimism about these measures. For example, Coahuila, one of the six border states, already announced intentions of petitioning the Finance Secretariat to eliminate some of the measures included in the strategy.  Specifically, the state’s government opposes regulations limiting monthly withdrawals to up to $4,000 for bank customers and up to $7,000 for businesses in cases where U.S. currency is exchanged for Mexican pesos. Members of Coahuila’s legislature argue that the bill will harm legitimate trade along the border, given that the number of transactions carried out in U.S. dollars often far exceeds that allowed by the new law.

Dissent also exists inside Calderón’s National Action Party (PAN). While supporting the money laundering legislation, former PAN senate leader Santiago Creel has made the case that a better strategy would also involve prioritizing improved intelligence sharing and criminal investigations rather than the current intensive use of military force. Others—including Manuel J. Clouthier, a legislator from the state Sinaloa—argues that Calderón’s security strategy has failed to target different cartels equally and fallen short on attacking organized crime in his violence-plagued state.

With Congress ready to return to session this week, Calderón remains committed to a strategy that centers on the use of troops. In a recent event with academics, the president declared that public force is the primary way to fight against organized crime even though this will generate, at least in the short term, more violence.

Learn More:

• Americas Quarterly’s interactive analysis of principal drug cartel leaders and trafficking routes.
• Mexico’s National Security Strategy.
• President Felipe Calderón’s declaration of the new bill targeting money laundering.
• The FBI southwest border factsheet.
• The U.S. Department of Justice’s 2010 National Drug Threat Assessment.
• Financial Times analysis on the perception of the fight against cartels in Mexico. Includes glossary of drug-war related terms.

Send questions and comments for the editor to: ascoa.online@as-coa.org.

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