Former drug enforcement chief underlines scale of TBML in US Mexico drugs trafficking

A former head of the US Drug Enforcement Administration’s international operations, Mike Vigil, has spoken about the major role trade-based money laundering (TBML) plays in the drugs trade between the US and Mexico.

Vigil told Business Insider that TBML is “highly lucrative and hard to detect” and identifies where he thinks this kind of money laundering is most prevalent.

Criminal processes

Once drugs are distributed and cash collected, the process of filtering the money back to a drug cartel’s headquarters begins, according to Vigil.

Since cash flows, particularly multimillion-dollar amounts, attract a lot of attention, criminal organisations rely both on bulk-cash smuggling and money laundering to move that money around, he told Business Insider.

“They used commodities-based money laundering, “where they buy, for example, gold and diamonds here, and then they smuggle them into Mexico. They’re sold over there and all of a sudden, voilá, you go from US dollars to Mexican pesos,” he said.

TBML focus

Vigil observed that TBML involving large purchases in the US is also highly lucrative and hard to detect.

“The epicentre for a lot of the money laundering for the Mexican cartels is Los Angeles,” Vigil said, “and they use the fashion district to launder money.”

Sinaloa cartel

Mexico’s Sinaloa drugs cartel used US drug proceeds to purchase clothes imported from China that were stored in the targeted fashion businesses’ warehouses” in Los Angeles, the DEA reported in its 2015 Drug Threat Assessment.

Clothes were subsequently shipped across the border into Mexico for resale and the profits chanelled into the Mexican financial system as legitimate proceeds.

Banks’ role

Large multinational banks have also been implicated in the cartels’ massive money-moving operations.

Both Wachovia and HSBC have faced federal investigations and punishments in the US in relation to illicit money dealings.

Categories: Trade Based Financial crimes News

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