Mexican drug lord ‘La Barbie’ captured in Mexico

Major drug trafficker Edgar "La Barbie" Valdez is presented during a news conference at the federal police center in Mexico City

It has been reported that the drug kingpin, Edgar Valdez-Villarreal, also known as La Barbie, has been captured by the Mexican police.

Due to drug laundering and smuggling activities across Mexico, La Barbie was wanted in Laredo and Mexico.

A Laredo native, La Barbie got captured on Monday after a shootout with Mexican authorities.

Although, the exact location of his arrest is unknown, according to some sources, La Barbie got captured in Mexico.

The former United High School football star, La Barbie was considered as a hero by many in Mexico. For information leading to capture La Barbie, U.S. authorities had offered a prize money of $2 million.

During Atlanta trial, in 2008, powerful evidences were shown against La Barbie to prove him as a major person in moving kilos of cocaine through Laredo.

Along with drug smuggling, La Barbie was also accused of murder and money laundering.

Source: AllVoices

Mexico targets money laundering with plan to limit cash transactions

President Felipe Calderon proposed sweeping new measures Thursday to crack down on the cash smuggling and money laundering that allow Mexican cartels to use billions in U.S. drug profits to enrich their criminal organizations.

Legislation introduced by the Calderon administration would make it illegal to buy real estate in cash.

The new laws would also limit the purchase of vehicles, boats, airplanes and luxury goods to 100,000 pesos in cash, or about $7,700. Violators could be sentenced to five to 15 years in prison.

Criminals here are increasingly using cash transactions to launder their vast profits, according to a senior Mexican official who investigates financial crimes but spoke on the condition of anonymity because of security protocols.

The Mexican official and his counterparts in U.S. law enforcement say that billions of dollars in cash are used to buy airplanes, ranches and businesses to circumvent new Mexican laws that require banks to report large cash movements.

"This illicit money is vital for the criminal. That is what they seek, this money. It is also vital to finance their activities," said Calderon, who called the new money-laundering laws "unprecedented."

Mexican drug cartels and their Colombian suppliers generate, launder and remove from the United States $18 billion to $39 billion each year, according to the National Drug Intelligence Center. Most of this money crosses the Southwest border in plastic-wrapped bundles of $20 or $100 U.S. bank notes, stashed in tires and engine compartments of cars and trucks.

"In the criminal world, cash is king, and in Mexico you have to go after the cash if you want to disrupt their operations," said Jerry Robinette, a special agent in charge of the U.S. Immigrations and Customs Enforcement agency in San Antonio.

A recent report by Douglas Farah, a consultant for the Woodrow Wilson International Center for Scholars, concluded that "very little is effectively being done to either impede the movement of drug money into the formal economy or significantly reduce the flow of bulk cash across the U.S.-Mexico border."

U.S. and Mexican agents seize no more than 1 percent of this southbound cash, according to an analysis by The Washington Post, based on figures provided by both governments.

If passed by the legislature, Calderon's new money-laundering laws would upend common practice in Mexico, where many legitimate buyers and sellers prefer cash transactions to skirt tax bills.

As part of the $1.4 billion Merida aid initiative to Mexico, U.S. agents have trained their Mexican counterparts to detect and disrupt money-laundering operations.

The Mexican government in June announced strict restrictions on cash deposits and withdrawals made in U.S. dollars. Mexicans with bank accounts can deposit as much as $4,000 in cash per month, but Mexicans without accounts can exchange only $300 a day up to $1,500 a month Businesses can move larger amounts of U.S. dollars but the new restrictions have faced tough opposition.

Source: The Washington Post

NZ firms linked to money laundering

by MICHAEL FIELD

Criminals are using shell companies set up under New Zealand's lax company laws to launder money.

Companies created by an Auckland firm operating out of Queen St have been linked to Russian crime, a Mexican drug cartel and Romanian extortion.

A 16-month Fairfax Media investigation has also tied companies created by Geoffrey Taylor and his sons Ian and Michael, who work out of 363 Queen St, to a company that smuggled arms out of North Korea.

The government admits there is a problem but says it has had other priorities.

The Taylor operation is not illegal, but the companies they create are connected to serious crimes in a number of countries.

They set up a shell company, Bristoll Export Ltd, that helped move part of the proceeds of a $245 million Russian tax fraud out of Moscow and into Swiss bank accounts. London-based Hermitage Capital Management hired a lawyer to find out what happened, but he died in a Moscow jail.

Hermitage chief executive Bill Browder told the Sunday Star-Times he was "highly motivated to make sure all aspects of this story see the light of day", and that he had a "treasure trove of information" about New Zealand companies' ties to the scandal.

The Taylors set up complex webs of companies, and one of them, linked to Russians in Cyprus, is administered out of a home in Albany near Auckland.

A United States Justice Department investigation into the banking giant Wachovia, also tied Taylor-linked companies to the movement of drug money. Wachovia was fined more than $202m for helping disguise the illegal origins of up to $479 billion for Mexican drug lords, predominantly the murderous Sinaloa cartel. Four Taylor companies "filtered" $50m in drug money through banks in Latvia and on to Wachovia. Each of the companies had just one director – Stella Port-Louis, 32, of the Seychelles, until recently a director of around 300 New Zealand companies.

Canada's Financial Transactions and Reports Analysis Centre, which assessed Wachovia, identified the "exploitation of New Zealand's weak company registration laws" as a problem.

International expert Martin Woods said shell companies were "ideal vehicles for money launderers, tax evaders and arms traffickers".

In 2009, a Georgia-registered cargo plane flew from North Korea to Bangkok and was found to have 35 tonnes of arms on it. The plane was chartered by SP Trading Ltd, a company set up by the Taylors.

The company's director was a Burger King cook named Lu Zhang, 29, who was later convicted of 75 breaches of the Companies Act for giving false addresses on registration forms, something she described in court as "one little mistake".

She is also a director of companies linked to Romanian Lorenzo Kiss, who is under arrest over an alleged $14.5m embezzlement.

Ian Taylor told the Sunday Star-Times media reports connected dots that weren't there.

PricewaterhouseCoopers Auckland's forensic services director Alex Tan said using company service providers had become common here.

"The money-laundering and even terrorist financing risks associated with them are high, particularly considering they can be set up over the internet."

Source: Sunday Star Times

How Drug Cartels Move Cash Across The U.S.-Mexico Border

by MICHEL MARIZCO

The cartels make billions of dollars on the drug trade. But they have to work out complicated schemes to get those dollars they make from addicts in the United States back into Mexico and convert them into usable pesos.

It's a lot of money. And money can overcome lots of challenges.

A recent investigation by U.S. authorities found that between 2004 and 2007, one large U.S. bank allowed nearly $500 billion of drug money to be wired through its systems, no questions asked.

Many of the wire transfers ended up in Culiacán, Sinaloa, the place to go to cash out American greenbacks for pesos in Mexico's organized crime capital. Experts describe it as a violent city along the Pacific Coast with a long history of drug trafficking.

Parasols line the streets of El Mercadito, the little market. The setup is the same at nearly every parasol. A woman sits in its shade, surrounded by 2 or 3 young, well built men.

A car approaches. Somebody was paid in American dollars and needs to convert that to Mexican pesos but doesn't want to report where the money came from. A negotiation. Then the cash transaction and money exchangers simply walks the dollars over to the money exchange house – “casas de cambia” – and cashes it out. The money exchange houses have reporting limits. So, if it's too much cash, and it often is, the money is divided up among more people to cash out.

One of the money exchangers speaks freely, his partners walking away when this reporter approaches. He said he has no idea where the money came from. He knows it started in the United States, but doesn't know how it got to this street in Culiacán.

The money exchanger said business was slow. There are some days here where he alone changes out $10,000 to $20,000, he said. There's at least ten parasol stations on this block. And there's enough work for everyone, he said.

The money exchanged on this street is small time. The big money transfers – the billions and billions of dollars – that involves the money exchange houses and big banks in the United States.

The biggest money laundering case has been that of North Carolina-based Wachovia Bank.

Investigators found that the bank had allowed $378 billion to flow unhindered from “casas de cambio” right into its bank accounts in the United States.

Michael McDonald is a retired IRS investigator. He laid the groundwork for much of the organized crime and bank investigations done today. Now he's an anti-money laundering specialist who works with banks.

"The value of those currency deposits exceeded normal transaction activity from these accounts. At that point, Wachovia, and any other institution, must be diligent, must pick up on those spikes and must answer the simple question of what's causing this,” McDonald said. “And it appears Wachovia never followed up on that."

The way the money was laundered was fairly simple: The drug traffickers used the Mexican “casas de cambio” as their middlemen. The money was smuggled into Mexico and deposited into the houses. Then, when the traffickers needed to buy items in the United States, the money house would transfer the funds into their own accounts at Wachovia.

Criminal proceedings were brought against Wachovia but nobody was ever arrested. Instead, Wachovia paid a fine – $160 million. Or, about 5 percent of the money laundered.

"This was an outrageous situation and I'm surprised that there were no criminal prosecutions in this case,” McDonald said.

Wells Fargo bought Wachovia in 2008. Executives declined to comment, but released a statement saying they've spent $40 million in the past four years to keep their banks compliant with anti-money laundering laws.

The “casas de cambio” here have a long history of shady dealings.

Elmer Mendoza, a crime novelist in Culiacán, said the black market for money has been a part of the city since the opium days in the 1940's.

Authorities said the Wachovia case is not the end of their work. There are other cases against other banks pending. The U.S. branch of London-based HSBC Holdings is now under investigation for the same types of dealings with money exchange houses.

Source: KPBS

OFAC Targets Colombian Drug Traffickers Linked To Sinaloa Cartel Leader

The U.S. Treasury Department said Wednesday it imposed Kingpin Act sanctions on four Colombian individuals and 12 companies tied to a Colombian national linked to the head of the Mexico-based Sinaloa drug cartel.


Announced by Treasury’s Office of Foreign Assets Control, Colombian nationals Mauricio Barcenas Rivera, Omar Mejia Zuluaga and Ana Maria Uribe Cifuentes, and dual Uruguayan/Ecuadorian national Jesus Maria Castro all had their U.S. assets frozen. The companies are spread across Colombia, Ecuador, Mexico, Panama and Uruguay.

The companies and individuals are all linked, according to the announcement (pdf), to Jorge Milton Cifuentes Villa, who was sanctioned by OFAC in February. Villa’s organization, OFAC said, is closely tied to Sinaloa Cartel leader Joaquin Guzman Loera, known as Chapo Guzman.

Both Guzman and Villa were indicted on drug-trafficking and money-laundering charges in Florida in November 2010, and Villa was separately indicted in New York in February 2011 on drug-trafficking charges, according to Treasury’s notice.

The full list of Wednesday’s designations is available here, and a chart diagramming Villa’s drug network is here (pdf).

Source: The Wall Street Journal by Samuel RUBENFELD

Small Success Shows Bigger Failure to Stop US-Mexico Cash Smuggling

U.S. authorities celebrated the confiscation of more than a million dollars in cash along the Mexican border, unwittingly illustrating the overall failure to stop billions of dollars in drug money that flow south into Mexico each year.

Custom officials made the first seizure Friday, when a Mitsubishi SUV was discovered with $600,000 in the spare tire while waiting to cross the border from Laredo, Texas. A day later, authorities in Eagle Pass, Texas, found almost $550,000 beneath the seat of a Mazda trying to drive into Mexico, Excelsior reports.

“This is the largest seizure of outbound currency in the history of Eagle Pass Port of Entry,” said customs director Cynthia O. Rodriguez.

Rodriguez’s comment unintentionally illustrates the general failure of U.S. and Mexican efforts to stop the southward flow of drug profits. According to the Washington Post, American officials grabbed just $85 million in illicit cash at the border in 2009. This is overshadowed by the $18-$39 billion in drug profits that the U.S. government estimates to cross the border each year. The figure appears to conflate cash shipments with other forms of money transfer, but even the lower end of the range would mean that U.S. authorities’ cash seizures are a fraction of a percent of the total.

The authorities are hailing the seizure of $1.15 million in illicit cash over two days as a success. But even if the pace was maintained for an entire year, and the government managed to confiscate $209 million, this would still be only a small fraction of the total estimated flow.

This lack of effectiveness reflects the difficulty of spotting cash shipments. Hundreds of thousands of cars cross the U.S. border with Mexico every day, and a thorough inspection of them all is not feasible. A million dollars in one hundred dollar bills occupies a space not much larger than a shoebox, so authorities are in search of the proverbial needle in the haystack.

Once cash makes it over the border into Mexico, drug trafficking organizations have to launder it. Here the authorities also fail; Mexican prosecutors secured just 37 convictions on money-laundering charges from 2008 through mid-2010, according to the Associated Press. This is despite the fact that in many cities it is common knowledge which businesses are connected to organized crime.

An asset-seizure law passed in 2009 was supposed to be an enormous step forward in the fight against money laundering. However, not a single case has been brought using the law in its two years of existence.

The problem with the law, according to the AP, is that it requires prosecutors to divulge the entire scope of their evidence against a suspect when seeking the seizure of an asset. This can throw future criminal prosecutions into jeopardy, a risk many are unwilling to take.

Mexico has also enacted stronger restrictions on dollar deposits in banks, which makes it more difficult to process drug money smuggled over the border. However, with the nation’s economy heavily based on cash, it is difficult to enact regulations strict enough to significantly limit the flow of dirty money.

A robust money-laundering effort would also depend on the participation of the banks where capos keep their money. However, banks have a strong financial incentive to avoid asking tough questions of people who do business with them. Consequently, they often don’t. U.S. bank Wachovia’s lax monitoring of $378.4 billion in cash transfers over several years illustrates this problem, as detailed in an investigation by British newspaper The Observer. As a result, the bank failed to identify the cash used to purchase of 22 tons of cocaine.

Source: Insight Crime

Mexico limit cash transactions to fight money laundering

The Mexican government, under fire for not doing enough to starve powerful drug dealers of billions in cash, said Tuesday it would limit cash transactions in U.S. dollars as a way to fight money laundering that helps to feed Mexico's spiraling violence.

Mexico's Finance Minister Ernesto Cordero said new rules, to be published Wednesday, will limit dollar bank deposits, the payment of loans and services as well as well as foreign-exchange transactions in cash to between $1,500 and $7,000 a month.

The tightening of banking rules comes as Mexico's government finds itself in an increasingly bloody struggle with the country's powerful and ever more daring drug lords who exert control over large parts of the country. Violence escalated Tuesday as 15 gunmen were killed in a battle with Mexican soldiers in Taxco, a popular tourist town that has become a battleground for rival gangs, and where authorities last month discovered a mass grave in an abandoned silver mine.

On Monday, twelve federal police were killed in an ambush by suspected drug traffickers in the western state of Michoacán who blocked the highway with buses to stop help from reaching the embattled policemen.

More than 23,000 people have been killed in drug-related violence since President Felipe Calderón ordered the military and federal police to battle drug traffickers shortly after assuming the presidency in December of 2006. Since then, Mr. Calderón has come under increasing fire from critics who say his military approach hasn't worked, and should be supplemented by more measures to strip drug traffickers of their financial assets.

"We are protecting our banking system from dollars that might be from illegal sources," Mr. Cordero said at a news conference. "The measures are designed so they don't affect formal, legal economic activity."

Mexican banks receive more than $10 billion a year in suspicious dollar flows in cash that can't be explained by legitimate economic activity, Mr. Cordero said. U.S. analysts say the amount of drug-related cash coming into Mexico from the U.S. could be as high as $29 billion.

Some analysts welcomed the measures as a necessary first step, but others said they were not enough.

Edgardo Buscaglia, who teaches law and economics at Mexico City's ITAM University, said the measures would increase costs to bank clients while doing little to fight money laundering.

He urged the Mexican government to conduct audits on thousands of companies that the U.S. and the European Union have identified as having connections to organized crime.

Under the new rules, individuals can make deposits or payments for up to $4,000 a month through their bank, while those same transactions are limited to $1,500 in the case of foreigners and Mexicans who don't have bank accounts. Cash dollar deposits and payments by businesses will be restricted to those operating in tourist and northern border areas, and limited to $7,000 a month.

Banks will be allowed to continue to sell dollars to the public, Mr. Cordero said. In recent months, a number of banks have restricted or stopped providing cash dollar transactions, including the sale of dollars to the public. The government said it does not expect the new measures to disrupt Mexico's second and third most important sources of foreign currency—remittances and international tourism, Mr. Cordero said.

Mr. Cordero said the rules affecting businesses will take effect after 90 days.

The government also plans to eventually restrict and regulate local currency transactions related to the purchase and sale of real estate and other goods and services in Mexico as part of a broad push against money laundering, Mr. Cordero said.

"Until real-estate purchases are channeled through the financial system, Mexican drug dealers will continue to launder money as was done in Miami during the 1980s," said Alberto Islas, president of Risk Evaluation Ltd., a Mexico City security consulting firm. Mr. Islas said that about 45% of real estate transactions in Mexico are done in cash. "The measures taken are timid."

Douglas Farah, senior fellow at the Washington-based International Assessment and Strategy Center said the Mexican measures would likely be difficult to enforce. "I think it will add a temporary layer of difficulty to attempts to launder dollars in Mexico, but one that will soon likely be circumvented by corruption or narco adaptation," Mr. Farah said.

Mr. Cordero said that Mexico's banks have agreed to expand the number of ATMs in Mexico by 12% this year and provide more credit card and debit card terminals to retail concerns operating in tourism and border areas, reducing the need for cash transactions. Hotels and other retailers will also have to obtain authorization to operate as banking agents to provide foreign exchange services, Mr. Cordero said.

Banking agents are third parties hired by a bank to perform basic financial transactions.

Write to Ken Parks at ken.parks@wsj.com and José de Córdoba at josedecordoba@wsj.com

Source: Wall Street Journal

US Targets Bank in Mexico Money Laundering Crackdown

In a move that may prove key in the fight against organized crime, the U.S. Justice Department is reportedly working to prosecute HSBC bankers for allegedly laundering Mexican drug money.

The Justice Department investigation, still at the beginning stages, hopes to build cases against individual bankers at HSBC. “Prosecuting individuals is their number one priority,” a source close to the investigation told Reuters.

HSBC first came under scrutiny in August 2010, when the Office of the Comptroller of the Currency (OCC) criticized the bank for "highly suspicious activity" that could allow the unreported movement of dirty money. HSBC agreed to improve its procedures, and has not yet been issued with a fine.

Some reports have suggested that HSBC could face a record $500 million fine, suggesting that the Justice Department is determined to make an example of the bank.

U.S. authorities have faced heavy criticism for failing to crack down on the laundering of dirty money through the banking system. Mexico's drug trafficking gangs may launder up to $36 billion through its northern neighbor each year, according to some estimates. The ability to move dirty money, undetected, through U.S. banks continues to fuel Mexico's conflict, allowing drug gangs to collect their profits.

But negligent banks rarely receive more than a rap on the knuckles: they often need only pay a relatively painless fine and agree to revamp their practices.

The most well known example of this lax treatment is Wachovia. The bank has been accused of “serious and systematic” violations of banking regulations, which allowed a sum of $420 billion to pass through its accounts unmonitored. It was found to have laundered funds for the Sinaloa Cartel, one of Mexico’s biggest drug trafficking organizations, which were used in a number of cases to buy planes which smuggled drugs. Prosecutors accused the bank of “willfully failing” to implement anti-money laundering procedures between 2003 and 2008.

Wachovia -- later taken over by Wells Fargo -- managed to avoid prosecution altogether by paying a total of $160 million to U.S. authorities. No charges were brought against individual bankers, and the government agreed to defer prosecution of the bank itself. These charges were dropped altogether once Wachovia showed it had implemented the required reforms. The sum was made up of $110 million in forfeitures, to compensate for the $110 million the bank admitted that traffickers had laundered through its accounts, added to a $50 million fine -- a paltry sum relative to the bank’s earnings.

A report on the case by British newspaper The Observer points out that the total fine paid was under two percent of the bank’s 2009 profits, which came to $12.3 billion. Such measures offer banks little financial incentive not to deal with dirty money.

At the heart of the money laundering investigations are Mexico’s “casas de cambio,” exchange houses which are often used by Mexican criminal groups to launder funds. One common practice is for drug trafficking organizations to smuggle large amounts of hard currency, collected from U.S. sales, back over the Mexican border, then deposit it into these exchange houses. The funds are then wired by these institutions into U.S. bank accounts. In the case of Wachovia, one exchange house, Casa de Cambio Puebla, used these funds to purchase a number of airplanes on behalf of the Sinaloa Cartel.

After the probe into Wachovia began, Puebla simply shifted its accounts to HSBC, according to Mexican prosecutors. Puebla was headed by Pedro Alfonso Alatorre Damy, who is accused of handling the finances of the Sinaloa Cartel.

The use of U.S. banks to launder criminal proceeds goes back many years. Citibank was censured by the Senate in 1999 for failing to stop money laundering by individuals allegedly including Raul Salinas, brother of former Mexican President Carlos Salinas, who was accused of links to drug gangs. Other banks accused of laundering Mexican drug money include American Express Bank, which paid $32 million in 1994 to avoid prosecution for charges that it laundered money for the Gulf Cartel. Two of its employees were convicted in connection to the case. The bank made a similar agreement with U.S. authorities in 2007, paying a $55 million fine and avoiding criminal charges over alleged money laundering.

Just as Mexican cartels can use their drug profits to corrupt and intimidate government officials and members of the security forces in Mexico, they can also persuade U.S. banks to look the other way as they process dirty money. One of the most important things the U.S. can do to help stop the violence erupting below its southern border is to tighten regulations and make sure violators face proper sanctions.

Mexico’s then-Attorney General Eduardo Medina Mora said in 2007 that U.S. efforts to counter money laundering by Mexican cartels, and stop the trafficking of weapons south, were more important than the $1.4 billion provided to his country through the Merida Initiative. Most funds allocated to this U.S.-funded program are targeted at boosting Mexico's law enforcement efforts through technology and equipment, with few measures aimed specifically at the issue of money laundering.

The Justice Department's reported determination to prosecute individuals who handle Mexican drug money could be a good step forward.

Source: InSightCrime

Mexico rethinks drug strategy as death toll soars

The drug war in Mexico is at a crossroads. As the death toll climbs above 28,000, President Felipe Calderon confronts growing pressure to try a different strategy — perhaps radically different — to quell the violence unleashed by major drug syndicates.

Even an elder from his own party, former President Vicente Fox, is taking potshots at Calderon, telling him that his policy is seriously off-track.

Many Mexicans don't know whether their country is winning or losing the war against drug traffickers, but they know they're fatigued by the brutality that's sweeping parts of their nation.

Calderon urged his countrymen this week not to gauge the drug war by the relentless rise of the death toll. In early April, newspaper tallies put the toll at around 18,000, but legislators then leaked a higher official estimate: 22,700. Earlier this month, the nation's intelligence chief said that 28,000 people most likely had been killed since Calderon came to office in late 2007.

"The number of murders or the degree of violence isn't necessarily the best indicator of progress or retreat, or if the war . . . is won or lost," the president told opposition party chiefs at a meeting called to pull the nation behind his counter-drug strategy. "It is a sign of the severity of the problem."

Calderon had called the party bosses — along with academics and civic leaders — into public sessions on how to improve security and get the upper hand against the drug gangs, several of which are engaged in bloody warfare over smuggling routes.

"What I ask, simply, is for clear ideas and precise proposals on how to improve this strategy," the president said at one session.

What Calderon, a bespectacled economist with a professorial manner, got instead was a barrage of criticism. The government should send soldiers back to their barracks, he was told, and do more to attack money-laundering and to protect judges. Several politicians, including Fox, suggested that Calderon consider legalizing narcotics.

The near-daily brainstorming sessions were interrupted when Calderon flew to Colombia to attend the swearing-in last Saturday of President Juan Manuel Santos, and that nation's success in battling cocaine cartels has served as a reference point for the discussions.

So have several disclosures and news events that underscore the levels of corruption that are corroding law enforcement efforts. Among them:

•Public Safety Secretary Genaro Garcia Luna said last Friday that narcotics cartels paid around $100 million a month in bribes to municipal police officers across Mexico, ensuring that their activities went undisturbed.

•Some 250 federal police officers abducted a commander briefly last weekend in the border city of Ciudad Juarez, accusing him of being in cahoots with traffickers and forcing the police to extort citizens.

Calderon is seeking support for wholesale police reform in Mexico, where some 33,000 officers belong to a federal police force and another 430,000 belong to disparate state or municipal forces. He's pointed to Colombia's unified national police as an example of how to make headway against organized crime.

Calderon wants to abolish the 1,200 or so municipal police departments and strengthen 32 state police forces under some level of federal command.

As it is now, he said, "there is no possibility of setting directives on strategy, logistics or even discipline on this enormous body of police at the municipal level."

Municipal police earn miserable salaries and are notoriously corrupt in much of Mexico, where they're subject to a choice by drug gangs — "plomo" or "plata" — either take a "lead" bullet or accept a payoff in "silver" to look the other way.

During Calderon's government, criminal gangs have killed 915 municipal police officers, 698 state police and 463 federal agents, the Public Safety Secretariat said.

"Probably the most corrupt institutions in Mexico are those municipal police forces," said Scott Stewart, the vice president for tactical intelligence at Stratfor, a company based in Austin, Texas, that provides global analysis.

"The police officers are kind of seen as some sort of third-class citizens," Stewart said. "Basically, the privileged ... like the fact that they can offer somebody 20 or 50 bucks to get out of a speeding ticket. It's very convenient to have that level of corruption."

After coming to office, Calderon turned to the military for help in fighting at least seven drug cartels that hold sway over vast areas of Mexico, rapidly deploying some 45,000 troops.

The deployment coincided with intensified fighting between rival groups, most notably the Gulf Cartel and its former armed wing, known as Los Zetas. The Sinaloa Cartel, perhaps the strongest drug syndicate to emerge since the heyday of Colombian cartels in the 1980s and early 1990s, is battling a weaker cartel based in the border city of Juarez across from El Paso, Texas.

As public discussions about counter-drug strategy unfolded in the past week, a surprising source of some of the harshest criticism was former President Fox of Calderon's own National Action Party.

"We should consider legalizing the production, sale and distribution of drugs," Fox wrote on his blog last Saturday, making big newspaper headlines the next day. "Radical prohibition strategies have never worked."

Fox wrote that legalization would "break the economic system that allows cartels to make huge profits, which in turn increases their power and capacity to corrupt." He also called on Calderon to send soldiers back to the barracks.

The broadside from Fox coincided with criticism from opposition party chiefs. Jesus Ortega, the head of the leftist Revolutionary Democratic Party, backed Fox's calls for legalization and said prosecutors should examine the corrupt financial system. The money of the cartels "isn't stuffed under the mattresses of drug lords," he said.

Attorney General Arturo Chavez Chavez acknowledged that legal "stumbling blocks" hindered the confiscation of drug lords' assets, saying that the government soon would offer reforms.

However, Stewart, the Stratfor analyst, said that entrenched political and business interests would block any reform of law enforcement or money-laundering legislation.

"There are powerful interests in Mexico who benefit from the drug trade and the $40 billion, or whatever it is, that is pumped into the Mexican economy," Stewart said. "You're talking bankers. You're talking businesses that are laundering money, construction companies that are building resorts. People are becoming very rich off the flow of money."

Source: McClatchy

US Agents Helped Launder Millions in Mission to Break Up Drug Rings

In an effort to infiltrate and wreak havoc on drug rings, Mexico's government allowed a group of undercover U.S. anti-drug agents and their Colombian informant to launder millions in cash, they eventually lost track of, for a powerful Mexican drug trafficker and his Colombian cocaine supplier. 

The Mexican magazine Emeequis published portions of documents, Monday, that describe how Drug Enforcement Administration agents, a Colombian trafficker-turned-informant and Mexican federal police officers in 2007 infiltrated the Beltran Leyva drug cartel and a cell of money launderers for Colombia's Valle del Norte cartel in Mexico.

The group of officials conducted at least 15 wire transfers to banks in the United States, Canada and China and smuggled and laundered about $2.5 million in the United States. They lost track of much of that money. 

In his testimony, the DEA agent in charge of the operation says DEA agents posing as pilots flew at least one shipment of cocaine from Ecuador to Madrid through a Dallas airport. 

The documents are part of an extradition order against Harold Mauricio Poveda-Ortega, a Colombian arrested in Mexico in 2010 on charges of supplying cocaine to Arturo Beltran Leyva. A year earlier, Beltran Leyva was killed in a shootout with Mexican marines in the city of Cuernavaca, south of Mexico City. 

The documents show Mexico approved Poveda-Ortega's extradition to the United States in May, but neither Mexican nor U.S. authorities would confirm whether he has been extradited. Mexican authorities listed his first name as "Haroldo." 

In a statement issued late Monday, Mexico's Attorney General's Office said it cooperates with the United States in combatting money laundering and said the Poveda-Ortega case, like others of its kind, "are carried out strictly within the legal framework." 

While the statement said that "coordinated money laundering investigations are carried out exclusively by Mexican authorities," it also noted that "sometimes, these investigations require specialized techniques to detect money laundering, which each agency carries out within its own jurisdiction." 

U.S. officials did not respond to requests for comment. 

The documents offer rare glimpses into the way U.S. anti-drug agents are operating in Mexico, an often sensitive subject in a country touchy about national sovereignty. 

On one occasion, the informant who began working for the DEA in 2003 after a drug arrest met with the girlfriend of a Colombian drug trafficker in Dallas and offered to move cocaine for their group around the world for $1,000 per kilo. In a follow-up meeting, the informant introduced the woman to a DEA agent posing as a pilot. The woman is identified as the girlfriend of Horley Rengifo Pareja, who was detained in 2007 accused of laundering money and drug trafficking. 

Another scene described the informant negotiating a deal to move a cocaine shipment from Ecuador to Spain and minutes later being taken to a house where he met with Arturo Beltran Leyva. 

Beltran Leyva was once a top lieutenant for the Sinaloa drug cartel, led by Joaquin "El Chapo" Guzman. But he split from the cartel shortly after his brother was arrested in 2008, setting off a bloody battle between the former allies. 

Fractured cartels have led to an increase of drug violence in Mexico. According to several counts more than 45,000 people have been killed since late 2006, though the government stopped giving figures on drug war dead when the toll hit nearly 35,000 a year ago. 

On Monday, police in western Mexico found the bodies of 13 men at a gas station in the state of Michoacan. 

The bodies were dumped near a convenience store on the gas station lot in the town of Zitacuaro, said Michoacan state prosecutors spokesman Jonathan Arredondo. 

Arredondo said threatening messages were found with the bodies, but he wouldn't comment on their content or give any other details. 

However, the federal Interior Department later said a total of 15 bodies had been found in Zitacuaro. The statement did not specify whether all were found at the gas station. 

Also Monday, the Michoacan state prosecutors office reported three high school students were shot to death by assailants who opened fire from a passing vehicle while the youths were relaxing in a park in the town of Yurecuaro, near the border with the neighboring state of Jalisco. 

There was no evident motive in the attack. 

The western state of Michoacan is home base to The Knights Templar cartel, which like its predecessor, La Familia, is a pseudo-religious gang specializing in methamphetamine production, drug smuggling, extortion and other crimes. 

Based on reporting by the Associated Press.

Source: Fox News

Former Interpol Mexico Director Faces Money Laundering Charges

The former director of Interpol Mexico, who is being held in prison, will be prosecuted on money laundering charges, the Attorney General’s Office said.

Rodolfo de la Guardia’s prosecution will move forward now that a criminal court has ruled in favor of the AG’s office, overturning a decision by a federal judge, prosecutors said.

De la Guardia has been held at the prison in Tepic, a city in the western state of Nayarit, since January 2009 on organized crime, drug and other charges.

Prosecutors allege that the former Interpol director was on the payroll of the Beltran Leyva cartel, one of the most violent criminal organizations in Mexico.

De la Guardia was in charge of assigning the heads of the field offices of the defunct AFI, Mexico’s equivalent of the FBI, allowing him to place agents the cartel had on its payroll in key posts, the AG’s office said.

The former Interpol director was paid $10,000 a month by the cartel for his services, the AG’s office said, adding that he has not been able to legally account for the money.

De la Guardia was arrested during “Operation Clean-Up,” which the government launched in March 2008 to root out corruption.

The Beltran Leyva cartel managed to infiltrate the security forces and put Noe Ramirez Mandujano, who served as Mexico’s drug czar, on their payroll.

Ramirez Mandujano was arrested in November 2008 during the operation, which targeted corrupt officials in the upper ranks of the Federal Police and AG’s office.

The former drug czar had been taking $450,000 monthly from drug traffickers, officials said.

Source: Latin American Herald Tribune

Mexican money remains blocked

The Federal Court says more than $130 million in Swiss bank accounts linked to Raul Salinas, the brother of a former Mexican president, will stay frozen.
In its ruling published on Thursday, the court rejected an appeal by Salinas' wife against an earlier decision by the investigating authorities to keep the money blocked.

The decision enables the Mexican justice authorities to confiscate the assets frozen since 1995 if they present a legal order to their Swiss counterparts.

Switzerland handed over the case of suspected money laundering by Salinas – brother of former president Carlos Salinas – to Mexican officials in 2002.

The court called on the Swiss authorities to closely follow the proceedings in Mexico where Salinas still faces charges of illegal enrichment.

Salinas claims the millions of dollars found in overseas bank accounts were legitimate - not the product of money laundering or political payoffs as prosecutors have suggested.

Paulina Castanon argued that keeping the money frozen for 12 years was excessively long and infringed the principle of proportionality.

But the court referred to the complexity of the case and said the length of the proceedings was not the fault of Switzerland.

http://www.swissinfo.ch/eng/front/Mexican_money_remains_blocked.html?siteSect=104&sid=8572764&cKey=1198772234000&ty=nd

Jersey lawyer criticises inconsistency of EU money laundering 'white list'

A Jersey lawyer specialising in the field of money laundering and financial services regulation has questioned the validity of the European Union's 'white list' of countries whose money-laundering controls are considered to be equal to those of EU member states, and which notably excludes leading offshore fund jurisdictions in Europe and the Caribbean.

Stephen Platt, an English barrister and chairman of BakerPlatt Group, queries the inclusion on the list of countries such as Russia, Argentina and Mexico, as well Australia and Canada, which have been adjudged to be less than 25 per cent compliant with the international standards established by the Financial Action Task Force.

Platt describes as "bewildering" the suggestion that the white list countries have higher standards of anti-money laundering controls than leading offshore financial services jurisdictions including the UK's Crown Dependencies.

"Having researched the background to some of the countries included, we question why countries that fall behind recognised international standards are on the list, while finance centres such as Jersey, the Bahamas and the Cayman Islands are not," says Platt, who advises governments and regulators on the implementation of regulatory and anti-money laundering rules.

An analysis by BakerPlatt and its alliance partner in London, Seven Bedford Row, notes that the first mutual evaluation report on Russia in 2001 by the European Committee on Crime Problems noted as a "critical deficiency" the country's lack of comprehensive laws and regulations implementing international standards on money laundering.

Although a second evaluation in 2004 noted significant improvements, it also found that numbers of investigations, prosecutions and convictions for money laundering were falling and know your customer procedures remained deficient.

A report on Argentina by Gafisud, a regional FATF offshoot for South America, noted inherent weaknesses in legislation that had the effect of impeding successful prosecution of money laundering, while no offence of terrorist financing existed. The country was criticised for its failure to provide statistics in anti-money laundering areas, preventing an assessment of the implementation of core requirements from being carried out.

The FATF's September 2004 report described the application of anti money laundering measures in Mexico as somewhat haphazard, and said the lack of mutual legal assistance legislation not only inhibited the country's ability to co-operate internationally, it also undermined national prosecutions. Bank and trust secrecy was also criticised as impeding investigations.

In addition, the lawyers say, while the FATF praised South Africa for developing a legislative structure to combat money laundering, the absence of a framework to combat the financing of terrorism was noted, whilst the framework in place was so new it needed time to be assessed for its effectiveness.

BakerPlatt notes that Jersey, which was not included on the white list, was assessed as 76 per cent compliant at the time of the island's last assessment by the International Monetary Fund in 2003. The most recent FATF assessments, issued in November last year, rated the Bahamas as 45 per cent compliant and Cayman as 78 per cent compliant.

However, five of the 13 countries on the list were far below this level, according to their most recent IMF assessments: Australia (24 per cent), Canada (14 per cent), Singapore (23 per cent), Switzerland (22 per cent) and the US (31 per cent).

"Australia's and Canada's staggering level of non-compliance with FATF recommendations makes it difficult for the EU to justify their inclusion on the white list on the grounds of 'equivalence'," Platt says.

"Given that the EU recently announced that it is to pursue infringement measures against 15 of its member states for failing to implement the Third Money Laundering Directive into national law, it would perhaps be better placed to give a jurisdiction such as Jersey the recognition it deserves, and the role model some of its member states appear to need, as the leader in the field of anti-money laundering."

Source: HedgeWeek

Brenda Martin guilty in money-laundering case

A Mexican judge on Tuesday found Brenda Martin guilty of money laundering, sentencing the Ontario woman to five years in prison without parole and a fine of close to $3,500.

Martin's friends have said she'll likely request to serve her prison time in Canada because launching an appeal would mean she would have to remain in a Mexican prison.

Her lawyer, Guillermo Cruz Rico, said the 51-year-old Trenton woman received medical assistance after she heard the verdict, but didn't give any further details. He said she was in a fragile mental and physical state.

"She was crying and screaming. She didn't believe what is going on here," he said.

Cruz Rico said he hadn't yet had a chance to read the judge's reasons for the ruling.

Martin's friend Deb Tieleman, who was in the courtroom, collapsed in deep sobs as the verdict was read, said CBC reporter Paul Hunter from Guadalajara.

Martin must spend at least another five days in jail because under Mexican law, a convicted prisoner must wait out the five-day appeal period before an appeal or transfer process can begin.

Mother alleges corruption
Martin's 69-year-old mother, Marjorie Bletcher, said she would pray for her daughter.

"This has to be devastating for her. This is crazy," she said tearfully from her home in Trenton. "She’s in such a fragile state, this might drive her over the edge."

She alleged corruption within the Mexican judicial system.

"This is a travesty of justice. I guess we didn't pay a judge so I guess that's why the verdict came down," she said.

Paul Macklin, founder of the Save Brenda Martin Fund, said while he is "extraordinarily disappointed," he does hope she'll be able to serve her time in Canada.

"There's a glimmer of hope we are going to be able to get her home," he said. "That has always been our key goal."

Ottawa will try to arrange speedy transfer: Day
Public Safety Minister Stockwell Day said the government will work to arrange a prisoner transfer as quickly as possible.

"Sometimes, these prisoner transfers can take weeks, if not months, but I have given instructions very clear that we want everything set up ready to go," Day told CTV Newsnet from New Orleans.

A former senior official with Foreign Affairs, Gar Pardy, said if Martin is transferred to a Canadian prison, she would soon be eligible for parole because she has already served two years in a Mexican jail. Canadian prisoners are usually eligible for full parole after serving one-third of their sentence.


"I think the key thing here is to work the system that exists to ensure she is transferred to Canada in as short a time as possible," said Pardy.

Martin was found guilty of being part of a $60-million internet fraud scheme run by Canadian Alyn Waage, who was convicted of fraud in 2006. He is serving a 10-year term in a U.S. prison.

Martin maintained her innocence, saying she worked for Waage only as a chef. Waage has testified Martin was unaware of his activities.

The nature of Mexico's justice system, which does not include oral trials and puts the onus on the accused to prove his or her innocence rather than on the prosecution to prove guilt, meant Martin had to wait out the legal process in prison.

Martin's family and friends say imprisonment has taken its toll on her, leaving her depressed, heavily sedated and on 24-hour suicide watch in Puente Grande women's prison near Guadalajara.

Switzerland to Give Mexico $74 Million Linked to Salinas Clan

By VOA News
18 June 2008

Switzerland says it will turn over $74 million to the Mexican government from bank accounts linked to the brother of former Mexican President Carlos Salinas.

In a statement Wednesday, the Swiss Justice Ministry said Swiss and Mexican authorities proved Raul Salinas had misappropriated the funds.

The statement said the remainder of the assets will be returned to the Salinas family since the investigation did not reveal any criminal origin. The handover concludes Swiss proceedings in the case.

Swiss authorities froze about $110 million worth of funds in 1995 when they launched a criminal investigation into Raul Salinas for alleged money laundering.

Raul Salinas said the money in his Swiss bank accounts was legitimately given to him by business associates as part of an investment fund.

In 1999, Raul Salinas was sentenced to 50 years in prison for the murder of his former brother-in-law, Jose Francisco Ruiz Massieu. He was released in 2005, after his conviction was overturned.

Switzerland gave Mexican authorities the documents from its money-laundering investigation in 2002.

Switzerland has taken a harder stance against money laundering in recent years in an effort to fight its reputation as a safe haven for the illegal funds of corrupt heads of state. Reforms have made it harder to hide money in the country's banks.

Some information for this report was provided by AFP, AP and Reuters.

Source: VoA

Argentine tax plan called money-laundering danger

An Argentine plan to boost tax revenue and stimulate the economy by enticing home offshore assets, with a no-questions-asked policy, is drawing fire from critics who say it could stimulate money laundering instead.

Argentine lawmakers began debating on Wednesday the bill sent by President Cristina Fernandez, one of a series of measures aimed at protecting the economy from the global slowdown by increasing investment and consumer spending.

With capital flight estimated at US$20 (NZ$37) billion this year and as much as US$140 billion in Argentine funds held offshore, the government wants to offer steep tax breaks to people and companies who declare their offshore investments.

The government has not said how much money it hopes to raise, but critics say the plan opens a can of worms because people who repatriate funds they parked offshore would be free of any investigation into the source of the money.

"The way it is worded the law is dangerous, at a time when drugs are advancing in this country, in terms of production, trafficking, consumption, financing of political campaigns and the presence of Mexican cartels," said political analyst Rosendo Fraga.

Argentina has largely been spared the drug violence of some Latin American countries, but in recent months sensational murders and arrests of alleged drug traffickers have shaken the country's sense of complacency.

Fraga also doubted the tax breaks would boost the economy since recent economic policies – such as a surprise nationalisation of the private pension fund system – have generated uncertainty about investing in Argentina.

Fernandez's ruling Peronist party and its allies have majorities in both the lower house and the Senate, but it was not clear whether the bill would get a smooth ride.

"Today Congress will vote on the worst amnesty law for corrupt people and money launderers," said opposition leader Elisa Carrio, of the Civic Coalition.

Argentina's basic tax rate on earnings is 35 percent, but the plan offers rates as low as 1 percent for assets that are repatriated and invested in industry, infrastructure or farming.

The same bill also sets out tax breaks for companies that put under-the-table workers on to the payroll. In addition, the government would drop prosecutions of individuals and companies who agree to long-term, low-rate plans to pay off back taxes.

Critics, including two former economy ministers under Fernandez and her husband and predecessor ex-President Nestor Kirchner, say those deals would punish those who followed the rules all along.

US Ambassador Earl Anthony Wayne initially said his country was watching the proposal closely, but this week he told reporters he was confident Argentina would continue to be a good partner in the battle against money laundering.

Argentina is a member of the International Financial Action Task Force, or FATF, an inter-governmental body that develops policies to combat money laundering and terrorist financing.

"Argentina's money-laundering law is in force and will continue in force. Argentina is not renouncing FATF norms or its commitments regarding money laundering and international terrorism," Cabinet Chief Sergio Massa said on Wednesday, in defense of the bill.

The Argentine economy grew by leaps and bounds over the last six years, but growth in tax revenue has slowed, as has industrial production.

The government has announced a US$21 billion public works programme and subsidized loans for car purchases, to preserve jobs in a tough global environment.

Source: STUFF

US-MEXICO: Celis Now Accused of Laundering Millions

State and local investigators raided the downtown office of Mauricio Celis on Friday, in search of evidence that the local businessman laundered millions of dollars across the U.S.-Mexico border.

Celis awaits trial after a grand jury indicted him for falsely holding himself as a lawyer, impersonating a police officer, aggravated perjury, and theft.

On Friday, investigators were looking for evidence to support their suspicions that Celis has also been laundering money.

Through its investigation, the Texas Attorney General's office believes Celis has been laundering money across the U.S.-Mexican border.

They zeroed in on one of his suspected Mexican business associates and found out he has a history with drug traffickers in Mexico.

In an affidavit for a search warrant, the attorney general's office says Celis has committed the felony offense of money laundering and that evidence of the crime can be found in computer files and other documents stored at his office.

Investigators raided Celis' eighth floor office in the Prosperity Bank building Friday, where his firm, CGT law group, operated.

A number of financial records client settlements and flight logs were written on the lengthy inventory list of items hauled away.

In a written statement sent to 6 news, Celis' attorney Tony Canales wrote, "We're looking at a political vendetta by an openly ambitious Republican politician in Austin who wants to score points by persecuting a prominent Democrat in South Texas."

While Celis has contributed thousands of dollars to many Democratic candidates over the years, investigators have turned their attention to a different series of transactions.

The affidavit states that from early 2000 to 2007, more than $7.8 million was withdrawn from a variety of local banks and after each withdrawal, Celis traveled to Mexico.

Records obtained from frost bank introduced them to a man named of Raul Armando Winder, a Mexican citizen, whom Celis opened a joint bank account with in 2005 for a company named "Pegasus Air Services."

According to Mexican intelligence, Winder is a pilot and a former Mexican police officer whose past employment history links him to drug trafficking.

Online Reporter: Erin Cargile

http://www.kristv.com/Global/story.asp?S=7581380&nav=Bsmh

The Banking Industry´s Dirty Little Secret: Money Laundering For The Drug Cartels

Dave Gibson

The United Nation´s Office on Drugs and Crime Executive Director Antonio Maria Costa recently told the Austrian magazine Profil that drug money has been the only thing that has kept many major banks in business.

Costa said: "In many instances, drug money is currently the only liquid investment capital. In the second half of 2008, liquidity was the banking system´s main problem and hence liquid capital became an important factor."

Costa went on to say that UNODC has discovered that "interbank loans were funded by money that originated from drug trade and other illegal activities." Incredibly, he said there were "signs that some banks were rescued in that way."

In the last few years, large banks have been getting into the remittance industry, which sends over $50 billion annually from the U.S. to Latin America. While much of the money is sent from laborers in this country back home to their families, drug traffickers heavily use remittances as a way to send their profits south of the border.

The banks charge very high fees for the service.

In 2008, the Wall Street Journal reported that the U.S. Justice Department has opened an investigation into money transfers conducted by Wachovia bank. It is alleged that Wachovia transferred funds from drug deals in the United States to Mexican and Columbian money-exchange houses, or casas de cambio.

There are countless casas de cambio just inside the Mexican border.

The following is a portion of the report which appeared in the Wall Street Journal on April 26, 2008:

"Wachovia built up its ties to casas de cambio as a way to tap the Hispanic market, which doesn´t always bank through traditional Main Street outlets. Wachovia served as a larger partner, holding the foreign-exchange houses´ deposits and providing back-office services. In 2005, it introduced the Dinero Directo card to facilitate cross-border remittances."

"The bank pushed into the business despite concerns from U.S. law enforcement that such firms were sometimes used to launder drug money. Wachovia declined to discuss why it pursued this business despite the warnings."

"Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms. In a case in U.S. court in Miami, federal agents seized more than $11 million in 23 Wachovia accounts belonging to Casa de Cambio Puebla…Mexican police raided Puebla offices last fall, alleging relationships with a major drug cartel."

However, Wachovia is only one of many U.S. banks to come under investigation for laundering drug cartel profits.

The following is a short list of banks which have resolved cases of money laundering, to avoid federal prosecution (Source: U.S. Justice Dept.):

2008, Sigue Corp. was alleged to be part of $24.7 million in suspicious funds in processed remittances. They forfeited $15 million and avoided prosecution.

2007, Union Bank of California was discovered to be laundering drug cartel profits through casas de cambio. The bank forfeited $21.6 million and avoided prosecution.

2007, American Express International Bank failed to report $55 million passing through the accounts of known drug traffickers. They paid $65 million in fines and avoided prosecution.

2006, Bank Atlantic paid a $10 million fine to avoid prosecution, when an undercover investigation discovered that drug profits were being laundered through one of their branch locations.

As part of their deferred prosecution, the banks agreed to reform their practices as well as submit to federal oversight.

Of course, this practice involves very large banks and very large amounts of money.

After an investigation of Union Bank of California, the Justice Department claimed that the bank failed "to maintain an effective anti-money-laundering program."

One case involved two drug traffickers using accounts from Ribadeo Casa de Cambio in order to transfer millions of dollars in drug proceeds. Federal prosecutors discovered $295 million in transfers from several Union Bank accounts back to their account, with only $29 million ever being repaid.

Prosecutors faulted Union Bank not only for failing to corroborate the legitimacy of the transfers, but prosecutors allege, the bank ignored the large volumes of traveler's checks with sequential numbers, large cash deposits and wire transfers strategically structured below federal reporting limits.

While ignorance may be bliss, it would be difficult for the banks to declare it as a defense. Since the mid-1990s, U.S. bank regulators and drug enforcement investigators have been warning U.S. banks that Mexican casas de cambio pose a great money-laundering risk.

Recently, both U.S. and Mexican authorities have taken a much tougher approach in policing the operations of the foreign-exchange firms. The Mexican Attorney General's office says some of the casas de cambio are part of an elaborate system which funnels drug money through U.S. banks, on to European banks and then back to the U.S. and Latin America.

This new and vigorous effort is undoubtedly in response to not only the extreme violence taking place in Mexico, as that nation´s powerful drug cartels threaten to topple the government, but to the growing presence the cartels now have in the U.S. as well.

Of course, it is not only the drug traffickers and low-level operatives who transfer drug profits through U.S. banks.

In 1998, the brother of former Mexican President Carlos Salinas, Raul Salinas was caught transferring hundreds of millions of dollars out of Mexico to Citibank in New York. Citibank was then sending the money to banks in Switzerland.

The Salinas family is believed by both U.S. and Mexican law enforcement to have received nearly a billion dollars from Mexican and Columbian drug cartels. Raul Salinas was released from prison in 2005, after serving ten years for the murder of his brother-in-law.

Upon consideration of the fact that many U.S. banks have engaged in laundering drug profits for the powerful and violent cartels, the $700 billion bank bailout engineered by Bush administration Treasury Secretary Hank Paulson seems even more questionable.

The fact that none of that bailout money went to help homeowners facing foreclosure, combined with the Treasury´s refusal to specifically tell Congress where $200 billion of it went makes you wonder if the relationship between the banks and the drug cartels goes far beyond what we are being told by the Justice Department.

Source: American Chronicle

U.S. Attorney General cites asset forfeiture as weapon against drug cartels

by Mary Spicuzza

Attorney General Eric H. Holder Jr. on Thursday spoke about using asset seizure and forfeiture to go after Mexican drug cartels during an appearance before the U.S. House of Representatives Committee on the Judiciary. Holder spoke of the goals, work and priorities of the U.S. Department of Justice, addressing topics ranging from counter-terrorism efforts and closing detention facilities at Guantanamo to investigating mortgage fraud and violent cartels.

He specifically cited the Justice Department's strategy for confronting violence, corruption and other threats posed by cartels. "This strategy uses federal prosecutor-led task forces that bring together federal, state and local law enforcement agencies to identify, disrupt and dismantle the Mexican drug cartels through investigation, prosecution, and extradition of their key leaders and facilitators, and seizure and forfeiture of their assets," Holder said in his statement. "The Department is increasing its focus on investigations and prosecutions of the southbound smuggling of guns and cash that fuel the violence and corruption, as well as attacking the cartels in Mexico itself, in partnership with the Mexican Attorney General's Office and the Secretariat of Public Security."

Holder's statements about seizure and forfeiture of cartels' assets come a month after President Barack Obama imposed financial sanctions on three of Mexico's most violent cartels — Sinaloa, Los Zetas and La Familia Michoacana — by adding them to the list of foreign "drug kingpins." The move to designate the trio under the Foreign Narcotics Kingpin Designation Act allows the U.S. government to seize or block the cartels' assets, accounts or securities subject to U.S. jurisdiction and prosecute U.S. citizens or companies who work with them.

Recently, the U.S. Department of State also released its Country Reports on Terrorism 2008, which criticized Mexico's recent terrorist financing law for its lack of asset forfeiture provisions, but offered praise for the country's efforts to combat violent cartels.

Source: Asset Forfeiture Watch

U.S. faults Mexican terror finance law for lack of forfeiture component

by Mary Spicuzza

The U.S. Department of State has released its Country Reports on Terrorism 2008.

The country reports' western hemisphere overview, made public last week, praised Mexican President Felipe Calderón Hinojosa and his Administration for demonstrating "an unprecedented commitment to address national security concerns," but criticized Mexico's recent terrorist financing law for its lack of asset forfeiture provisions.

"In 2007, President Calderón signed into law legislation outlawing terrorist financing and associated money laundering. The new law established international terrorism and terrorist financing as serious criminal offenses, as called for in UN resolution 1373, and provides for up to 40-year prison sentences," it reads. "The measure also incorporated several non-finance related provisions including jail sentences for individuals who cover up the identities of terrorists and for those who recruit people to commit terrorist acts. While it lacked some important provisions, such as asset forfeiture measures, the law was a significant step forward."

Still, the State Department cited justice reform legislation that may include asset forfeiture authorities. And it commended Mexico's relationship with the U.S. in various law enforcement areas, including efforts to combat money laundering, terrorist financing and narcotics trafficking.

The Embassy of Mexico in Washington, D.C. did not return a call seeking comment.

Source: Asset Forfeiture Watch