Sunday, September 14, 2014


The President of Mexico, Enrique Peña Nieto, in a speech given last Friday in Reynosa, has declared that the strict, and to date highly effective, restrictions on Mexican businesses making large US Dollar deposits, in banks and MSBs, will now be partially lifted. Sr. Peña stated that the reason for the change was that Mexican companies were hurting honest businesses and corporations.

The restrictions, which imposed a USD$14,000 monthly limit on dollar deposits, now contain an exception. To qualify, these conditions must be met:

(1) The business must have been established for a minimum of three (3) years.
(2) The business must allow the authorities to monitor all its financial transactions.
(3)  The business must prove that it needs to make monthly deposits in excess of $14,000 in order to operate.

In recent years, Mexican narcotics traffickers have been forced to bulk cash smuggle their dollar profits into Panama, and other Central American jurisdictions, in order to deposit their drug profits earned in the US. They have also resorted to shipping the cash back into America.

Will this new exception to Mexico's extremely effective method of denying traffickers a safe haven for their dollars ? It is too soon to say, but experienced money launderers will probably do the following to qualify:

(A) Buy into, or otherwise take control of legitimate businesses that have been established for the mandatory three years.
(B) Bribe, threaten or otherwise coerce underpaid and corrupt inspectors and regulators who visit their entities into certifying to their superiors that they are in full compliance with the law.
(C) Make sure that the businesses they purchase can show that they need to deposit large amounts of dollars to compete, and survive.

Is President President Peña's new policy a dangerous step backwards in his country's anti-money laundering efforts ? Absolutely. It will only serve to open the floodgates again to drug dollars entering the global financial structure, which will further empower the Mexican Cartels.

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