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Illicit Finance

Mexican DTOs are the primary money launderers in the Atlanta HIDTA region; they generally transport bulk U.S. currency to the Southwest Border for eventual transportation to Mexico. Mexican distribution cells operating in North Carolina often transport bulk cash from North Carolina to Atlanta, where the cash is combined with drug proceeds from Atlanta; the entire amount is then transported by DTO members to the Southwest Border. The volume of illicit funds flowing from and through Atlanta to the Southwest Border and Mexico is evident in 2007 seizure data. According to the DHS Blue Lightning Operations Center (BLOC), law enforcement officers in the southeastern United States seized more than $30 million in bulk cash that was being transported from Atlanta to the Southwest Border in 2007.10 Seized cash was usually concealed in hidden compartments in private or commercial vehicles that were typically registered in the name of the actual driver to avoid law enforcement suspicion. This method represents a shift from past practices, when many individuals who were recruited as drivers for bulk cash shipments were not the registered owners of the vehicles--a situation that frequently made law enforcement officers suspicious when they stopped and questioned the drivers.

Mexican DTOs in the Atlanta HIDTA region also launder illicit funds through money remitters or electronic wire transfers or sometimes by structuring deposits11 into numerous bank accounts and electronically transferring the funds into accounts in Mexico or southwestern states. Members of Mexican distribution cells use wire transfers and money remitters to send drug proceeds to their sources of supply in Mexico. The use of structured deposits, or "smurfing," resurged in the Atlanta HIDTA region in the past year. ICE officials report that Mexican DTOs often employ females to make bank deposits under $3,000 to numerous accounts to avoid reporting requirements under the Bank Secrecy Act (BSA).12 The accounts are then immediately accessed from source areas, such as California and Texas, and the funds are withdrawn.13 The DTOs purportedly use females because the DTOs believe that females who make these deposits will attract less attention from law enforcement or bank officials than males; the DTOs pay the females to make the deposits--the females typically are not DTO members.

Drug traffickers in the region use front companies, cash-intensive businesses, and real estate to launder drug proceeds; they also engage in "asset substitution." Asset substitution involves a third party, often a facilitator or semilegitimate criminal associate, who purchases items such as used automobiles and/or boats in the United States and then ships the vehicles to another country for resale. Drug traffickers purchase the vehicles from the third party in cash, usually at inflated prices; the purchaser's identity is often concealed. The traffickers then resell the vehicles to unwitting buyers, generally within the same community.

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Mexican DTOs will quite likely become further entrenched in the Atlanta HIDTA region and continue to expand their distribution operations throughout the southeast, including into areas of North Carolina, South Carolina, southern Virginia, and Kentucky, particularly as they gain additional market exposure. These DTOs will use more rural areas to store illicit drugs for further transport to nearby cities or states because they believe law enforcement scrutiny to be less intense in rural areas.

Mexican DTOs will continue to transport large quantities of cocaine into the Atlanta HIDTA region. Cocaine availability at the wholesale level may continue to fluctuate in the region because of increased security at the U.S.-Mexico border and continued efforts against Mexican DTOs operating in Mexico; however, the fluctuations should not be severe enough to greatly impact cocaine availability at the retail level.

Indoor cannabis cultivation will continue in the Atlanta HIDTA region; however, indoor cultivation by Cuban DTOs will quite likely decrease in 2008. The number of indoor cannabis plants seized in 2007 was unusually high because of heightened law enforcement operations against Cuban DTOs in the Atlanta HIDTA region. Members of the Cuban DTOs were surprised by the intense law enforcement pressure brought against them and shocked when federal charges were filed. The numerous arrests of Cuban DTO members will most likely hamper their ability to continue to cultivate cannabis in the region. Moreover, law enforcement pressure will quite likely force Cuban DTOs to seek locations outside the HIDTA region for indoor cannabis cultivation. These factors may effectively reduce their presence in the region.

Street gangs will further exploit the Internet for gang-related activities in the Atlanta HIDTA region. The Internet will provide gang members with quick communication and a means to collaborate and share information. African American gang members will post music videos on Internet file-sharing web sites, detailing their drug distribution activities.

End Notes

10. The U.S. Department of Homeland Security (DHS) Blue Lightening Operations Center (BLOC) provides the Gulf Coast HIDTA with 24-hour phone communications and the El Paso Intelligence Center (EPIC) with real-time information from various databases.
11. A person structures a transaction if that person, acting alone, or in conjunction with or on behalf of other persons, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purposes of evading the reporting requirements under Title 31. "In any manner" includes but is not limited to the breaking down of a single sum of currency exceeding $10,000 into smaller sums, including sums at or below $10,000. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring within the meaning of this definition.
12. The Bank Secrecy Act (BSA) of 1970 was designed to do the following: deter money laundering and the use of secret foreign bank accounts; create an investigative paper trail for large currency transactions by establishing regulatory reporting standards and requirements; impose civil and criminal penalties for noncompliance with its reporting requirements; and improve detection and investigation of criminal, tax, and regulatory violations.
13. BSA recordkeeping rules require presentation of identification at the time of transaction and entry into a wire transfer log for transactions of $3,000 or greater.

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