Money Laundering and Bulk Cash Smuggling: Challenges for the U

By Douglas Farah enior Fellow nternational Assessment and Strategy Center S I The Scope of the Problem Bulk cash smuggling across the U.S.‐Mexico border cannot be viewed in isolation. Rather, the process of illegally moving large quantities of dollars across the border must be viewed as part of the movements in a larger pipeline that flows across the northern tier of South America, through Central America and Mexico and into the United States. The pipeline, fed by many smaller feeder lines, moves products both north and south, and the a significant portion of the violence in Mexico today, as well as among the maras in Central America, revolves around disputes over control of portions of that pipeline, its plazas and branches. The primary goods flowing northward are cocaine, human traffic, gang members hired by the drug cartels as enforcers, and marijuana. The primary products moving south are large amounts of cash generated from the illicit activities, stolen cars and other goods, and weapons. It is important to understand that all of these products move through the same basic rchitecture and rely on many of the same facilitators to enable the flow of goods nd services. a a Historically, Mexico has been the single greatest source of U.S. currency repatriated by a foreign country to the United States. Moreover, documented inflows from Mexico have customarily exceeded outbound reporting linked to legitimate sources such as worker remittances and cross-border commerce, revealing a substantial unexplained gap. The gap, estimated to be between $11 billion and $22 billion, can be attributed, in large part, to bulk cash smuggling associated with transnational criminal activity such as drug trafficking and alien smuggling. The March 2007 seizure of $207 million in cash from drug trafficking proceeds from a Mexico City residence is a dramatic example of the scope of the problem.