Mexican Cartel

Mexican Cartel

Money laundering is a form of destructive conduct that criminals all around the world engage in. It is the process of transforming illegal revenues into “clean” money that cannot be traced back to its source. Money laundering, in addition to being a financial crime, is linked to other sorts of crime such as drug trafficking, human trafficking, and prostitution. Criminals and terrorist organizations need to launder their funds to legitimize them before integrating them into the financial system as legal currency.

During the 1980s drug war, governments implemented money laundering legislation in an attempt to locate and seize drug trafficking proceeds to capture drug gangs and banks that assisted them. In this post, we’ll look at how drug cartels launder money and how banks play a role in the process.

How Does Big Cartel Launder Money?

Washing filthy money requires utilizing the three stages of money laundering and the associated tactics. The launderer uses criminal funds to legitimately reintroduce them into the financial system. The funds are then constructed in a convoluted series of transactions before being integrated into the legal economy, which progresses from carrying out financial transfers to being a true ‘financial asset or acquisition.’

Because integration is the final level of the three-stage strategy for cleaning dirty money/money laundering, law enforcement authorities face a difficult problem in tracking the cash back to the original drug-selling sources. At this point, the monies have bypassed far too many legal procedures. This is why drug cartels use money laundering ways to make their unlawful riches legitimate while avoiding detection by authorities.

  • Smuggling of cash: Currency smuggling appears to be on the rise. Cash smuggling is the act of physically transporting money to another country and depositing it in a bank there. Drug dealers have established shipment officials or firms to facilitate the movement of cash. US customs will check shipments leaving the nation less frequently than they will check shipments entering the country.
  • Smurfing or structuring: In this case, one must divide their entire cash deposits into pocket amounts less than the reported threshold of $10,000. Smurf couriers are used to making these deposits at various banks or to purchase cashier’s checks in modest sums.
  • Transfers by wire: A wire transfer is a virtual transfer of funds from one country to another. This could include transferring funds to a person, an entity, or an account. Wire transfers continue to be the primary technique at all phases of the money laundering process, particularly at the layering stage. Illicit funds can be transmitted through several banks in various countries to blend and conceal the tracks back to the source.

Why Is It Important To Stop The Money Laundering of Cartels?

While criminals are fast to adopt technological advancements in financial transactions such as cryptocurrencies, financial institutions and authorities must be more aggressive in combating drug cartel misuse. Meanwhile, financial institutions should investigate technology possibilities for preventing money laundering through these new-age transaction techniques.

How To Use AML To Prevent Dirty Money Flow?

Financial institutions must thoroughly understand how the crime operates to identify and report potential money laundering and meet compliance obligations. Placement, layering, and integration are the three stages of money laundering. This is a complicated series of operations that begin with depositing monies and progress to what appear to be legal assets.

The placement of unlawfully obtained funds relates to how and where they are placed. Payments to cash-based businesses; payments for false invoices; “smurfing,” which involves depositing small amounts of money into bank accounts or credit cards; transferring funds into trusts and offshore companies that conceal the identities of beneficial owners; using foreign bank accounts; and canceling transactions shortly after funds are lodged with a lawyer. The process of separating illegal finances from their source is referred to as layering. It entails changing unlawful gains into another form and building multiple layers of financial transactions to conceal the origin and ownership of the monies. Criminals do this to obscure the trail of their illicit payments, making it difficult for AML investigators to track down the transactions.

The re-entry of laundered cash into the economy through what appears to be a routine, legitimate company or personal transaction is referred to as integration. This is sometimes accomplished through investing in real estate or high-end assets. It allows money launderers and criminals to amass more fortune.