These are the 2 classic ways Mexican cartels launder money

Business Insider: Mexico is home to several drug trafficking organizations (DTOs): the Sinaloa cartel, La Familia cartel, Knights Templar cartel, Juarez cartel, and others.

Generally, these organizations buy cocaine processed in South America and smuggle it into the United States to sell. After that, however, they need a way to get the money back to Mexico — and secretly. Read more. 

Mexico’s Pena Nieto Bought Home From Government Contractor: WSJ

NOTE: The Wall Street Journal digs up another Peña Nieto conflict of interest case, concerning another residence linked to a favored contractor. This makes four now that are in some way under investigation, including Videgaray's. In Mexico we know that these cases are almost certainly a very small part of the corruption (remember that his mentor, Carlos Salinas de Gotari managed a $1,350 million- pesos discretionary fund and his brother Raúl bought 41 properties as a government employee in his brother's adminisitration. Here is a good summary of the accusations).

I find it interesting that the Wall Street Journal is doing this kind of investigative reporting in Mexico. Several weeks ago I spoke with Rubén Luengas of the excellent Univisión radio show "Hablando Claro" about this. It seems that there is a powerful part of the U.S. international business class that would like to see Peña Nieto out of the way during the implementation of the reforms that he got passed in the country. The WSJ, Bloomberg (below), Forbes and others have been openly picking up the Ayotzinapa movement's calls for Peñá's resignation. That's some strange bedfellows that can't help but make one wonder what is afoot. It's possible that transnational companies are afraid that the traditional and ever more evident corruption of the PRI is bad for business. 

They seem to take the implicit position that corruption is fine when applied to the Mexican people through vote-buying and election-rigging. And it's fine when major companies like Walmart use bribes as a business lubricant. But the possibility that the government will syphon off some of the potential earnings of the long-awaited exploitation of Mexico's natural resource is more than they can handle. 

Bloomberg: Mexican President Enrique Pena Nieto in 2005 bought a property from a developer whose construction firm went on to win almost $150 million in public works contracts during his time in public office, the Wall Street Journal reported.


Pena Nieto, 48, bought the weekend home in an exclusive golf club in Ixtapan de la Sal, a resort town in the State of Mexico, from Roberto San Roman weeks after taking office, the newspaper reported, citing documents. A company San Roman started then won $107 million in business from the state when Pena Nieto was governor from 2005 to 2011, the Journal said. Read more. 

Attacking the Money-Laundering Problem in Mexico

National Law Review: According to the Los Angeles Times, Mexican officials have estimated the amount of laundered money in the Mexican economy at $50 billion annually—three percent of the legitimate Mexican economy.  The CIA World Fact Book labels Mexico as a “major drug-producing and transit nation”, as well as a “significant money-laundering center”.  Illicit cash flows from cartels have affected nearly every corner of the Mexican economy.

On October 17, 2012, Mexico passed the Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita (the “AML Law”), a new federal law aimed at identifying and preventing the use of illegal proceeds and terrorism financing.  The AML Law became effective on July 17, 2013.  The AML Law created an investigative unit within the Mexican Attorney General’s office, tasked with investigating transactions involving illegal proceeds.  It also provides for monetary and administrative sanctions, as well as criminal liability. Read more. 

As Mexico cracks down, drug money comes to U.S.

Denver Post: For a company that booked $12 million in annual sales importing snacks such as chile- and lime-flavored chips from Mexico, Baja Distributors Inc.'s offices were oddly quiet.

There were no signs outside. Its small warehouse was almost empty. Phones went unanswered.

Investigators say there was a reason for the anonymity: The business was laundering money from Mexican drug traffickers. Baja Distributors, whose executives denied laundering drug money, brought more than $17 million from Mexico in 18 months.  Read more. 

Laundering Mexico's Drug Money: Washing Up

The Economist:Drug traffickers, like everyone else, only want money because they want what money can buy. But turning dirty cash from drug sales into clean, usable currency has become harder for Mexican drug gangs as a result of tighter banking regulations at home and in the United States, their main market.

The criminals are responding by piggy-backing on cross-border trade to launder their gains. Read more. 

Arson Suspected in Deadly Fire at Mexican Preschool

Latin American Herald Tribune: The June 2009 fire at a daycare facility in the northern Mexican city of Hermosillo that left 49 children dead might have been deliberately set, Reporte Indigo newspaper said Monday, citing documents from the investigation.

The federal Attorney General’s Office has had in its hands for several months the statements of three people who implicate the senior aide to the then-governor of Sonora state, Eduardo Bours, the daily said.  Read more. 

Mexico Faces Challenges in Tackling Corruption

ABC News 
By E. Eduardo Castillo
Associated Press
June 26, 2013

It's a scandal a day in Mexico: an ex-governor sent to jail, another under investigation, mysterious money popping up in senators' bank accounts, politicians passing stacks of bills on YouTube.

Scandals are nothing new to Mexican politics, but the pace of revelations is accelerating as a more robust democracy and social media have emboldened Mexico's watchdogs, who are increasingly trying to bring the officials to justice or at least publicly shame them. And much of the new attention focuses on scandals in states, where the powerful grip of governors often had masked wrongdoing in the past.  Read more. 

Calderon says drug war was his legal duty

San Antonio Express/Jason Buch, Staff Writer 

Updated 11:19 pm, Thursday, March 21, 2013

• 
  Photo: Billy Calzada, San Antonio Express-News

In a speech that focused primarily on his economic and social accomplishments, former Mexican President Felipe Calderón recalled a moment of doubt he felt as a member of the country's burgeoning opposition party.

Speaking Thursday night at Trinity University, Calderón said he confronted his father, a founding member of the National Action Party, with concerns about their campaign against the ruling Institutional Revolutionary Party.

His father responded, “We are doing this because it is the right thing to do,” Calderón said. “It is our moral duty to our country.”

Decades later, after his father's death, Calderón became the second president from his party, known by its Spanish acronym PAN. His six-year term, filled with controversy over his decision to use Mexico's military to confront organized crime, ended in November.

He's been accused of launching an unnecessarily bloody war against the cartels and allowing his forces to commit human rights abuses, but Calderón told the crowd that it was the same moral duty his father spoke of that led him to launch his war against Mexico's drug cartels.

Calderón acknowledged that abuses had taken place, but he insisted they happened against his orders and that perpetrators were prosecuted.

He characterized the cartels as criminal organizations involved in extortion and kidnapping, not just drug smuggling. He said that when he took office, criminals controlled the police in border states, such as Tamaulipas, the home state of one audience member who questioned his use of the military. Previous administrations, Calderón said, had chosen not to enforce the law.

“Either you enforce the law, which is your duty, or change the law,” he said in a news conference before the speech. “But you cannot ignore the law. In my opinion, enforcing the law is a very difficult task, but it is absolutely necessary. And if Mexico wants to be one of the developed nations, we need, as Mexican people, to have a rule-of-law country. Otherwise we will lose a lot of opportunity.”

One audience member questioned Calderón's characterization of the social and economic situation in Mexico, and another gently chided him for moving to the United States after his term ended. He's now teaching at Harvard's Kennedy School of Government in Cambridge, Mass.

The former president focused largely on Mexico's economic growth, especially in the manufacturing sector, and pension reform under his administration. Calderón also touted his expansion of the nation's education and health care systems. Such efforts, which Calderón characterized as “rebuilding the social fabric” of Mexico, were part of his effort to undermine the cartels.

Calderón said the U.S shares blame as well, allowing cash and money to flow south of the Rio Grande.

“What is crucial is to stop the flow of money going from the United States to Mexico,” he said. “In order to do that, the American society, Congress and government, have a moral obligation to find a way in which they could prevent the flow of that money.

“I don't want to say that the way to do that is to improve the money laundering regulations or to increase the strength of the American agencies or to explore market alternatives for drugs, but the point is as long as the American government and society are not able to stop the flow of money toward Mexico, Latin America, that will imply several years of violence ahead.”
jbuch@express-news.net

Read more: http://www.mysanantonio.com/news/local_news/article/Calderon-says-drug-war-was-his-legal-duty-4375166.php#ixzz2ON06SdX3

Mexico’s Narco Televisa Scandal: The Impunity of the Elite

MadCow Morning News posted on October 29, 2012 by Daniel Hopsicker

Even as he prepares to take office in a month, a mushrooming scandal in Mexico threatens that country’s new President, Enrique Pena Nieto.

Some call it Mexico’s Watergate; the comparison might even be apt.

Like Watergate—which picked up momentum only after Richard Nixon had won the ’72 Presidential election—the Narco Televisa Scandal is heating up just before Pena Nieto takes office.

Watergate had a largely unexplored Mexican connection. The Narco Televisa Scandal has an American angle. Both scandals involve drug money.

And therein lies the rub, explaining why reaction in the U.S.—despite billions of US taxpayer dollars pouring into the black hole of  Mexico's drug war—has been a studied and exceedingly mild indifference.

“It has become known as the case of the fake journalists, read the lead in a recent wire report about the case distributed to American newspapers.

But this is untrue. No one in Mexico—where Televisa’s guilty involvement is almost a given—is calling it that. It is the Narco-Televisa Scandal. Read more. 

Mexico passes law to combat cartel money laundering

Chicago Tribune: MEXICO CITY (Reuters) - Mexico's Congress on Thursday approved a long-awaited law to crack down on money laundering in a bid to attack the finances of the country's powerful drug cartels.

The law, proposed two years ago by outgoing President Felipe Calderon as part of his offensive against drug gangs, was passed by the Senate on Thursday. The lower house passed it earlier this year.

The new federal law puts restrictions on cash purchases of real estate, jewelry, armored cars and other assets that criminals use to launder illicit funds.

Companies will be required to report large cash purchases under the law. Car sales of more than 200,000 pesos (about $16,000) and real estate purchases of more than 500,000 pesos (about $39,000) must be reported.

The bill carries a minimum penalty of five years in prison.  Read more. 

Mexico's Senate approves bill to fight money-laundering epidemic

LA Times: October 11. By Richard Fausset and Cecilia Sanchez. 

MEXICO CITY -- Mexico’s Senate on Thursday unanimously approved an anti-money laundering bill in hope of stemming a multibillion-dollar tide of illicit cash that flows from the nation’s powerful drug cartels and has seeped into nearly every corner of the Mexican economy.

The bill, which was approved this year by the lower chamber, has been under consideration for more than two years in the Mexican Congress and could help the struggling nation in its fight against the narco gangs. Although the outgoing administration of Felipe Calderon has managed to kill or capture more than two-thirds of the country’s most-wanted drug capos, it has struggled to hit them in their bank accounts.

Calderon, who leaves office in December, has long supported a stronger anti-laundering statute, and on Thursday -- a day when Amnesty International was criticizing him for failing to have taken more effective action to stem human-rights abuses committed in his six-year fight against the narcos -- the president sent a tweet congratulating the legislators. Read more.

'Caravan For Peace,' Led By Mexican Poet Javier Sicilia, Protests Drug War In New York

Huffington Post: NEW YORK -- Javier Sicilia took one last drag on his cigarette before tossing it in front of a downtown HSBC bank branch. He then strode into the bank lobby, followed by fellow demonstrators and a dozen police officers, returning outside a few minutes later with a black briefcase filled with $1 bills dotted in red.

Sicilia then grabbed a fistful of the cash and threw it on the sidewalk in front of the bank.

"En este banco se lavan dinero!" Sicilia shouted, jabbing his finger behind him. "In this bank, they launder money!" someone translated as the noted Mexican poet repeated himself in Spanish.

Sicilia was joined in a protest Friday by some 100 Mexican and American activists as part of a 6,000-mile "Caravan for Peace" against the international drug war, in which his son was killed a year-and-a-half ago. After speaking about failed drug policies on the steps of City Hall, Sicilia and the group marched to a branch of HSBC. Read more.

Laura's Blog: HSBC: How laundering drug money fuels the drug war violence

Today the Peace Caravan will pay a visit to HSBC Bank, to protest the financial crimes that enable drug cartels to launder their huge illegal earnings. These crimes are rarely punished because of the importance of illegal money to the financial system. HSBC was caught with highly questionable practices between its US and Mexican branches and currently faces charges. They expect to settle for record fines, while avoiding criminal charges.

But financial crimes are not victimless, nor are they non-violent crimes. What looks like white-collar crime on the books is red with blood in the streets. The Caravan will challenge the bankers on Wall Street to look the victims in the eyes and will also call for stricter enforcement and punishment.

HSBC Money-Laundering Fuels Violence in Mexico

FACTS:

* HSBC is a British bank and the largest European bank. HSBC has vast interests in Mexico since 2002, when it bought Banco Bital, Mexico’s fifth largest bank. HSMX (HSBC in Mexico) has $2 billion dollars in assets.

* A Senate investigation found that HSBC transported $7 billion dollars in cash from Mexico to the United States in armed cars or aircraft in 2007 and 2008 alone. The Mexico-U.S. transfers far surpassed that of any other branch. Despite this highly suspicious activity and known cartel activity in the country, HSBC gave Mexico a low-risk rating for money laundering and permitted the transfers.

* A typical strategy of drug cartels to launder money is to smuggle US dollars from drug sales into Mexico, and then use international banks to send them back to the U.S. This is what HSBC did.

* HSBC was also found to have established accounts for Mexican money exchange businesses and other suspicious entities, and cleared billions of dollars in travelers cheques.

* The bank opened US dollar accounts in the Cayman Islands for Mexican clients for more than $2 billion dollars.

* The Mexican regulatory commission fined the bank $27 million in July of this year—a slap on the wrist for one of the world’s largest transnational financial institutions.

* On July 17, a Senate sub-committee published a lengthy report on HSBC case, concluding that it failed to apply anti-money laundering measures.

The over 300-page Senate report, from which most of these facts are taken, can be found here: http://www.hsgac.senate.gov/subcommittees/investigations/hearings/us-vulnerabilities-to-money-laundering-drugs-and-terrorist-financing-hsbc-case-history

HSBC in the United States:

* HSBC is being sued in a class action suit for foreclosing on homes of veterans in the U.S. 

As hundreds of families are evicted from their homes due to a crisis caused by the banks themselves, drug money assures the banks themselves see growing profits.

We call for: 

* Real vigilance and strict enforcement of anti-money laundering laws

* Exemplary fines for banks found guilty of money-laundering, like HSBC.

* Divert military/police drug war funding to increased public funding for enforcement of money-laundering laws—destroy the financial structures of the drug cartels, not human lives.

US border guards found guilty of people-smuggling

BBC: Two former officers of the US Border Patrol have been found guilty of using their position to smuggle hundreds of illegal immigrants across the border from Mexico for personal gain.

Raul Villarreal and his brother, Fidel, were also convicted of accepting bribes and conspiring to launder money.

Before the case, Raul Villarreal often appeared as a high-profile spokesman for the US Border Patrol agency. Read more.

Mexico: The Campaign Continues

NACLA: Fred Rosen. Confusion reigns in the post-campaign. The months following Mexico’s presidential election are turning out to be as conflictive and as revelatory of Mexican politics as the election itself. One of the nasty debates of the post-campaign centers around the testimony of a Mexican-American public relations hustler named José Luis Ponce de Aquino.

The PR man claims to have been approached by campaign functionaries of the victorious (maybe) Institutional Revolutionary Party (PRI) and hired to use his many media contacts and his own media/public relations firm, Frontera Televisión Network LLP, to promote a favorable image of PRI candidate Enrique Peña Nieto in the United States. For his services, says Ponce de Aquino, he was offered (in writing) the outsized sum of $56 million dollars, but was never paid. Read more.

How Much Will Mexico Money Laundering Cost HSBC?

Forbes: Earlier this year, on February 27, 2012 HSBC Holdings Plc announced that it will likely face criminal or civil charges from an expanding U.S. Department of Justice investigation into its alleged ties to suspicious money transactions. Investigators are looking into the banks’ dealings in Mexico.

Today, July 17, executives from HSBC, one of the world’s largest banks, are expected to testify before a U.S. Senate Committee regarding questions about how lax controls may have allowed money launderers to take advantage of HSBC’s services. Read more.

HSBC gave its lowest risk rating to Mexico between 2000 to 2009 even though the country was in high-risk for drug trafficking and money laundering. In 2007 and 2008, HSBC's Mexican bank shipped $7 billion in cash, likely supplied by the illegal drug trade.

Bloomberg News: HSBC Executive Resigns at Senate Money Laundering Hearing
HSBC Holdings Plc (HSBA)’s head of group compliance, David Bagley, told a Senate hearing he will step down amid charges the bank gave terrorists, drug cartels and criminals access to the U.S. financial system by failing to guard against money laundering. Read more.

How the US Government, Banks, Prison-Industrial Complex, Corrupt Officials, Businesses, Law Enforcement, Racists and the CIA Profit From Illegal Drugs

This article is broad and brings together many strands of the story. The resulting image is of a war on drugs that for reasons of its own leaves in tact the financial empire built on illegal flows through powerful "legitimate" financial institutions and targets foreign countries, the poor and people of color. The links are also useful.

Truthout: A recent article in The Guardian UK offers evidence that "while cocaine production ravages countries in Central America, consumers in the US and Europe are helping developed economies grow rich from the profits." According to The Guardian UK story, the study by two Colombian professors found that "2.6% of the total street value of cocaine produced remains within the country [Columbia], while a staggering 97.4% of profits are reaped by criminal syndicates and laundered by banks, in first-world consuming countries."

One of the researchers, Alejandro Gaviria said: "We know that authorities in the US and UK know far more than they act upon. The authorities realize things about certain people they think are moving money for the drug trade - but the DEA [US Drug Enforcement Administration] only acts on a fraction of what it knows." Read more.

Drug Probe Targets Mexican Army

WSJ.com: MEXICO CITY—The arrest of a former deputy defense minister and three other retired and active high-ranking Mexican army officers on suspicion of having been in the pay of a drug cartel is shaping up as the biggest scandal to hit the army in years.

Last week, a judge issued preliminary detention orders for three generals and a lieutenant colonel. The move allows prosecutors from the organized-crime division of the Attorney General's Office to question the men for up to 40 days before formal charges would need to be filed.

Officials haven't said why the men are being held. But according to the men's relatives, a person familiar with the legal proceedings and media accounts citing unnamed sources in the Attorney General's Office, the four are being questioned over allegations they were in the pay of one of Mexico's leading organized crime groups, the Beltran Leyva cartel. Read more. 

U.S.-Mexico Relations: Calderon asks Biden to stop the flow of arms to Mexico

Milenio: "Mexico City • President Felipe Calderon and U.S. Vice President Joseph Biden reaffirmed the commitment of both countries' governments to the consolidation of their shared responsibility, trust and mutual respect as the basis for cooperation in all areas.

During their meeting at the official residence of Los Pinos, they agreed on the importance of coordinated work with a long term vision of the welfare and safety of the two societies. They emphasized the importance of the contributions made by migrants to their communities of origin and destination.

Calderon reiterated "the priority need to strengthen actions against the trafficking of weapons into our country and money laundering."" Spanish original

Mexico Drug War: Traffickers Launder $85billion a Year in US

InSight Crime: "According to a US Department of Justice official, international drug traffickers launder $85 billion a year in the United States. El Universal reports that the Jennifer Shasky, chief of the department's Asset Foreclosure and Money Laundering Section, said the Sinaloa Cartel, one of the largest in Mexico, uses shell companies registered in the US as part of its money-laundering operations." read more