Tag: magnetic cards

An image of $3M in crisp bills stacked high in a cube in bundles

$3M Seized by CBP: A Lesson Money Laundering

Recently, the Border Patrol part of U.S. Customs & Border Protection seized about $3 million from a pair of people consiting of a Mexican national and a U.S. Citizen just outside of San Diego, California. The full story from CBP is available for reading here, but it involved two vehicles. Here are the relevant excerpts:

At the scene of the vehicle stop, a Border Patrol K-9 alerted agents to conduct a search of the vehicle, resulting in the discovery of eight vacuum-sealed bundles containing $33,880 that was stashed in the center console.  A 53-year-old male U.S. citizen was arrested upon the discovery.

Additional agents were able to locate the Volkswagen Passat as it was abandoned at a cul-de-sac located in a residential area within close proximity of the vehicle stop.  Soon after, the agents found the vehicle’s driver, a 41-year-old male Mexican national, hiding in some brush nearby and arrested him for suspicion of currency smuggling.  Agents searched the vehicle and seized $3,018,000 that was found inside eight boxes located in the trunk.

Business Insider (a publication which rarely seems to live up to its name) wrote an insightful piece on the the seizure and some background on bulk cash smuggling and how drug cartels must get the profits from their drug sales in the United States back to them in Mexico. The story says that this is largely done by physically moving the cash across the border, often in semi-trucks, hidden with commercial shipments. But another method is trade-based money laundering:

A fall 2014 investigation revealed that cash was being dropped off at clothing and textile companies in the city, which then used the cash to buy goods that were shipped to Mexico to be resold for pesos that eventually made their way to the Sinaloa and Knights Templar cartels.

“The Sinaloa Cartel used US drug proceeds to purchase clothes imported from China that were stored in the targeted fashion businesses’ warehouses,” the DEA said in its 2015 report. “The clothes were then shipped across the border into Mexico for resale and the profits placed into the Mexican financial system as legitimate proceeds.”

Guzmán’s Sinaloa cartel has also reportedly taken advantage of free-trade agreements to launder money in Latin America, circumventing tariffs on apparel and reselling goods bought with dirty cash to earn a legitimate profit.

These schemes aren’t limited to clothes.

“They used commodities-based money laundering,” Vigil told Business Insider. “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, voilĂ , you go from US dollars to Mexican pesos.”

In addition to this way of smuggling and laundering money, we also wrote about the rise in using magnetic cards to move cash across the border in bulk without the need to physically transport anything more than a hotel key card.