The head of Mexico’s Finance Ministry’s Intelligence Department, Santiago Nieto reported to Reuters that the local government is struggling to combat the growing numbers of BTC laundering cases from the country’s crime syndicates.
According to Nieto, the Intelligence Unit is severely understaffed relative to the work they have to do in order to keep these funds within Mexico and simplify their tracking process for the local police. The number of employees working on this is currently around 120, while Nieto mentioned that at least 4 times that much staff is required to truly have a chance at dealing with this issue.
How are the crimes committed?
According to the information provided by Nieto himself, the Cartels are using the Mexican anti-money laundering law for cryptocurrencies against the government itself. You see, most of the law is revolved around very specific amounts of money. For example, a bank deposit of less than $7,500 is not going to warrant a more articulate check from the bank’s staff. What this means is that thousands of cartel members can register with local Mexican banks, transfer millions of dollars worth divided between themselves with funds below $7,500 and then do whatever they want to with it. Naturally, they would have to diversify these deposits across many banks as a pattern can easily be discovered.
Once these funds were on the bank accounts, cartel members could easily transfer them to different registered crypto exchanges in the country. This was then combatted by the Mexican government with the AML laws we mentioned before. Any transferred sum exceeding $2,800 would have to be reported to the local authorities by the local crypto exchanges.
Therefore, all the Cartels had to do was simply stretch their money laundering activities across multiple months rather than do it all within just one day.
Several have already been discovered
It’s not like the Mexican government is not acting on this already. Several Cartel members, who were a bit more reckless with this strategy have already been arrested, which is how the government actually found about these activities in the first place.
However, Nieto still presses the issue of having as many staff members as possible in the Intelligence Unit to completely stop these things from occurring. It’s not necessarily known whether or not this number of staff can be hired, considering the pandemic situation currently.
Furthermore, all of this new staff has to be trained, supervised, and directed, which could take an additional few months. Let’s not forget that it may take months or even years for these new employees to truly master their jobs in the Intelligence Unit as well, thus making the process much more cumbersome for the government.
But, no matter how long or how much effort it may take, it is absolutely essential that the Intelligence Unit is packed with capable staff.
What happens to the funds once they’re on the exchanges?
It’s not necessarily known where these funds are later transferred by the Cartel members, but what we can guess is that they diversify across as many crypto exchanges across the world as possible.
So, a payment to a local crypto exchange could appear on a Chinese company’s wallet, or simply disappear completely as the user just transfers it to a cold wallet to lay low.
Overall, there is very little that the Mexican government can do when it comes to tracing the transactions after they’ve been identified to belong to a Cartel member. And even if they find these funds in a specific location, there is a very large process of contacting that specific crypto exchange and working with the country’s financial regulators to get those funds back.
Now try doing this thousand of times pretty much every month with just 120 employees. In some cases, we can even safely assume that the Cartels don’t even care if they’re discovered because they know the government does not have the resources to deal with this issue at the moment. So they’re going to milk it for as long as they can.