Mexico limits dollar transactions to fight narco cartels

By Tracy Wilkinson
Los Angeles Times

In a step aimed at thwarting money laundering by drug cartels, the government of Mexico announced strict limits Tuesday on the deposit and exchange of U.S. dollars in banks, noting that the nation's economy is being flooded with illicit drug profits.

The money helps traffickers buy military-grade weapons used to kill tens of thousands of people and recruit small armies all over the country who battle rival gangs and government forces.

Failure to intercept the money has long been singled out as a major flaw in President Felipe Calderon's military-led offensive against the cartels.

In response, the government announced that it will limit individual bank account holders to deposits of $4,000 monthly in U.S. currency, while others without accounts will be allowed to exchange up to $1,500. Companies working along the border or in designated tourist areas can conduct bank transactions of up to $7,000 monthly.

Drug traffickers have long taken advantage of lax rules and the preponderance of cash transactions in Mexico to launder multibillion-dollar annual profits in Mexican banks and currency exchange houses. It is routine to see all-cash purchases of high-end items such as real estate, airplanes, horse farms and expensive art.

The new measures were announced in Mexico City by Finance Minister Ernesto Cordero, who said they are designed to reduce laundering by "closing the path to illicit resources" funneled into Mexican banks. He said that about $10 billion in surplus — and probably illicit — money has been detected annually in the Mexican banking system.

articles.latimes.com/2010/jun/15/world/la-fg-mexico-dollar-20100616