Mexican authorities are reporting an increase in the use of crypto assets to launder funds by criminal syndicates in Latin America.
In a December 8 report of Reuters, the head of Mexican Treasury Department’s financial intelligence unit Santiago Nieto described how cartels use crypto to launder money obtained from illegal activities.
Neito argues that Latin cartels will typically deposit their ill-gotten gains into various bank accounts as amounts under $ 7,500 – the threshold that would prompt banks to flag a transaction. The money is then used to make a large number of small amounts of BTC, which can then be transferred across borders without any hassle.
A 2018 law required registered crypto trading platforms to report transfers in excess of 56,000 Mexican pesos (approximately $ 2,800). Local authorities hope this can help them respond to organized crime’s use of digital assets.
The arrest of human trafficker Ignacio Santoyo in April 2019 has been blamed on the law, with authorities finding that Santoyo and his sister had acquired more than $ 22,000 worth of BTC on the local stock exchange Bitso.
Hector Ortiz, the accused leader of the Mexican cyber hacker syndicate Bandidos Revolution Team, was similarly arrested after police determined he had spent “tens of thousands of dollars” on BTC – prompting investigators to trace his locations using cell phone data .
However, Rolando Rosas, the head of the Cyber Investigations Unit at the Mexican Attorney General’s Office, said Reuters police do not have the resources to tackle cryptocurrency money laundering. He said the unit has 120 staff – about a quarter of what it takes – and it struggled to keep up with the 1,033 Bitcoin threshold warnings triggered on registered trading platforms this year.
About 98% of the transactions were reported by Volabit – an exchange operating in the Jalisco New Generation Cartel, or CJNG’s, home state of Jalisco. Volabit’s general manager, Tomas Alvarez, told Reuters:
“It is a mistake […] to assume that since the alerts are generated by a company in Jalisco, they must match residents of Jalisco […] we have users from all over the country. In fact, most of the reports are not from users living in Jalisco. “
In January, a report from the U.S. Drug Enforcement Agency reported a decline in hard currency seizures from $ 741 million in 2011 to $ 234 million In 2019, suggested that organized crime gangs are now using crypto assets to power much of their money laundering activities.