Martes, 17 de Septiembre del 2024
Money laundering is one of the biggest challenges in the war on drugs. It has become a norm for drug cartels to employ enhanced methods in concealing their illicit income. It proves a hard nut to crack for law enforcement agencies when pursuing this money.
The FATF has estimated that $2.5 trillion of unlawfully obtained funds circulate the world annually, of which a proportion is attributable to narcotic sales.
To prevent such vices, the failure of which drug cartels continue to perform some illicit activities. It is important to have an understanding of the different ways through which money is laundered.
Some common methods of money laundering used by drug cartels.
In narco trafficking, there are several known techniques to exploit their illegal money. One of the simplest is the process of bulk cash smuggling.
Organized crime, such as cartels, transport huge amounts of cash by concealing it in car trunks, trucks, or aircraft.
For the year 2022, the amount of $800 million was seized by the DEA in bulk cash smuggling operations.
This method is still widely used because of its effectiveness owing to its simplicity and the high level of money at stake.
Bonus: Your AML compliance programs should be strong and efficient in addressing issues of drug money laundering and other related offenses.
Cartels also employ a method referred to as structuring or smurfing. This is a process of splitting large amounts of cash into several installments, which attracts less attention from law enforcement agencies.
These are deposits made into different accounts to avoid the discovery of the money made by drug trafficking. Suspicious structuring activities have also been identified to be on the rise.
According to the Financial Crimes Enforcement Network (FinCEN), it is a popular method of money laundering. Across the recent past, SARs associated with structuring have risen by 15% annually.
Shell companies establish fronts whereby they conduct seemingly legal operations. These companies are comfortable in washing their illicit cash with clean money.
For example, a cartel may decide to open up an auto washing bay or a restaurant, which is camouflage required for the movement of funds.
According to the U. S. Department of Justice (DOJ), in 2023, 37 percent of the investigative cases of drug money laundering dealt with shell companies.
Trade-based money laundering strategies entail using trade invoices as a tool to facilitate the transfer of money from one country to another.
Cartels often engage in practices such as over-invoicing or under-invoicing goods to transfer funds between countries. This technique is difficult to identify since the operation of international trade is complicated.
Current research suggests that illegal trade accounts for between 65 and 70 % or up to 2 trillion dollars of money laundering every year.
Illegal money can be easily ‘washed’ through real estate, which is one of the most favored options for such an operation.
Drug cartels acquire high-value assets for real estate purposes, including mansions and other commercial-related structures.
These investments assist in money laundering. It can be difficult to ascertain whether or not the money is from the drug-selling business or other bona fide property deals.
In 2023, FATF stated that 20% of real estate transactions were associated with the identification of registered major transactions.
This is evidence of why AML compliance should be tight in the real estate industry, which has had an increased uptake in recent years.
Engaging in money laundering, casinos make it possible to mix cash. Most of these are from illegitimate businesses with actual winnings.
There are cases where cartels use the proceeds of their unlawful activities to buy chips in a casino, engage in minimal betting, and then take out the money as ‘clean’ money.
According to the report, there has been an alarming rise, about 10%, within the year in money laundering in connection with casinos.
This sector, governed by BSA AML regulations, involves a lot of cash transactions, and it has become an easy target for money laundering activities.
Another way of concealing money is through offshore accounts in countries that are against AML laws.
They opened these accounts for cartels depositing their money so that the police would not seize it.
According to the report of Global Financial Integrity, 2024, around one billion US dollars are parked in offshore banking centers.
Over all of them are connected with organized crime and the drug Business. These accounts are hard to link since the existence of such accounts is protected by offshore ordinances.
Cartel money laundering also employs currency exchange schemes to facilitate money laundering. Some go for black market currency exchange, whereby the dollar is exchanged with the local equivalent.
Cross-border transactions complicate efforts that may be undertaken to freeze the assets of the suspects.
According to the International Monetary Fund (IMF), about $300 billion is washed annually through currency exchange services.
Contact us at amlwatcher.com to find out how our AML solutions can strengthen your ability to detect cartel money laundering and protect your business.
