The Mexican authorities report a rise in the use of cryptocurrencies to launder funds by criminal syndicates in Latin America.
According to a recent report by Reuters, the head of Mexico’s finance ministry’s financial intelligence unit, Santiago Nieto, described how cartels use cryptocurrencies for money laundering obtained in illegal activities.
Neito asserts Latin cartels will typically deposit their ill-gotten gains into various bank accounts as sums of few than $7,500 USD – the edge that might prompt banks to flag a transaction. The funds are then wont to make a myriad of small quantities of Bitcoin [BTC], which may then be transferred frictionlessly across borders.
A 2018 law mandated that registered cryptocurrency trading platforms report transfers exceeding 56k Mexican pesos [$2,800 approx]. Native authorities hope this will assist them in responding to the utilization of digital assets in crime.
Earlier in April last year, the arrest of human trafficker Ignacio Santoyo has been attributed to the law, with the authorities identifying that Santoyo and his sister had acquired over $22k worth of BTC on the native exchange Bitso.
Hector Ortiz, the accused leader of Mexican cyber-hacking syndicate Bandidos Revolution Team, was similarly arrested after enforcement identified he had spent “tens of thousands of dollars” worth of BTC – this gave investigators cause to trace his locations using phone data.
Moreover, Rolando Rosas, the head of the Mexican attorney general’s office’s Cyber Investigations Unit, told Reuter’s enforcement lacks the resources needed to tackle cryptocurrency-fueled laundering. He added that the unit has 120 staff – a few quarters of what’s required – and it struggled to stay up with the 1,033 Bitcoin threshold alerts that were triggered on registered trading platforms this year.
Around 98% of the transactions were reported by Volabit – an exchange operating within the Jalisco New Generation Cartel’s home state of Jalisco. Volabit’s general director Tomas Alvarez told Reuters:
“It is a mistake […] to assume that since the alerts are generated by a firm based in Jalisco, they need to correspond to residents of Jalisco we’ve users from everywhere around the country. In fact, most of the reports aren’t from users who reside at Jalisco.”
Also earlier in January, a U.S. Drug Enforcement Agency report revealed a decline in cash seizures from $741 Mln in 2011 to $234 Mln earlier in 2019, suggested that the gangs are now using cryptocurrencies to power much of their money-laundering activities.