Mexican Authorities, Narco Cartels, and Crypto

Criminal groups in Mexico are using various methods to launder money obtained in illicit activities. Unfortunately, it is quite hard to investigate such cases. According to a law that dates back to 2018, registered crypto trading platforms must report transfers exceeding 56,000 Mexican pesos (approximately 2,800).Thanks to this law it will be easier to detect suspicious activities. 

Importantly, Latin cartels will typically deposit illegally obtained funds into various bank accounts as sums of less than $7,500, the threshold that would prompt banks to flag a transaction.

It is worth mentioning that the funds are then used to make a myriad of small quantities of Bitcoin which can then be transferred frictionlessly across borders.  

People should take into account that, authorities arrested human trafficker Ignacio Santoyo thanks to this law. Santoyo and his sister bought more than $22,000 worth of Bitcoin on the local exchange Bitso. Interestingly, Ignacio Santoyo was not the only person arrested thanks to this law. 

Importantly, Hector Ortiz, the accused leader of the Mexican cyber-hacking syndicate Bandidos Revolution Team. According to authorities he spent tens of thousands of dollars worth of Bitcoin, this helped investigators to locate him thanks to cell phone data. 

Crypto and illegal activities

However, due to the sheer number of illegal activities connected with crypto, it is quite hard to investigate all of them. Unfortunately, the Cyber Investigations Unit which is part of the attorney general’s office does not have enough resources to tackle cryptocurrency-fueled money laundering. At the moment, 120 people work in the Cyber Investigations Unit. This unit should employ more people to investigate more than 1000 Bitcoin threshold alerts. 

Interestingly, an exchange that operates in the state of Jalisco reported approximately 98% of the transactions. Based on the information provided by Volabit, most of the reports are not from users who live in Jalisco. 

Let’s have a look at the report prepared by the U.S. Drug Enforcement Agency. Interestingly, the amount of hard currency seized fell from $741 million in 2011 to $234 million in 2019. The report suggested that organized crime gangs are now using crypto assets to power much of the money-laundering activities. 

Importantly, narco cartels are using various methods and crypto is not an exception. Thus, Mexican authorities are struggling to identify such cases. Moreover, Mexico and other countries in the region should work together to reduce the number of such crimes. As a result, it will be easier to achieve this goal.