Illicit Finance - Atlanta HIDTA Drug Market Analysis

As the region's principal drug traffickers, Mexican DTOs are a primary concern among law enforcement officials with respect to drug money laundering. Mexican DTOs transport illicit drug proceeds primarily in bulk from the region to locations at or near the U.S.-Mexico border. The proceeds are then generally commingled with illicit drug proceeds generated in other areas and smuggled into Mexico for eventual repatriation. Law enforcement officials report that Mexican DTOs generally transport bulk cash shipments in personal and commercial vehicles equipped with hidden compartments. Further, law enforcement reporting reveals that Mexican DTOs are increasingly using cloned vehicles, such as utility, delivery and, occasionally, law enforcement vehicles, to transport bulk cash. Mexican DTOs also use money remittance services, including national firms as well as small businesses in Hispanic communities, to wire illicit proceeds from Atlanta. Additionally, Mexican DTOs periodically employ Colombian money brokers to assist them in laundering their drug proceeds. Colombian money brokers operating in the HIDTA region generally launder illicit funds using electronic wire remittance services and the Black Market Peso Exchange (BMPE). (See text box.)

Black Market Peso Exchange

The BMPE system originated in the 1960s when the Colombian government banned the U.S. dollar, intending to increase the value of the Colombian peso and boost the Colombian economy. The government also imposed high tariffs on imported U.S. goods, hoping to increase the demand for Colombian-produced goods. However, this situation created a black market for Colombian merchants seeking U.S. goods and cheaper U.S. dollars. Those merchants possessed Colombian pesos in Colombia but wanted cheaper U.S. dollars (purchased under official exchange rates) in the United States to purchase goods to sell on the black market. Colombian traffickers had U.S. dollars in the United States--from the sale of illicit drugs--but needed Colombian pesos in Colombia. Consequently, peso brokers began to facilitate the transfer of U.S. drug dollars to Colombian merchants, and business agreements were forged, allowing those Colombian merchants to purchase U.S. dollars from traffickers in exchange for Colombian pesos. Although the ban on possession of U.S. dollars was later lifted, the black market system became ingrained in the Colombian economy, and Colombian drug traffickers continue to rely on this system to launder their U.S. drug proceeds.

Source: Department of Homeland Security Federal Law Enforcement Training Center.

Other DTOs and criminal groups operating in the Atlanta HIDTA region launder illicit drug proceeds through bulk cash transport and money remittance services, but they also employ other money laundering typologies, including structuring bank deposits and money order purchases; commingling drug proceeds with revenue generated by legitimate businesses; using check-cashing and currency exchange businesses; purchasing consumer goods and vehicles, often in another person's name; and purchasing or leasing businesses such as restaurants, bars, used car lots, landscaping businesses, and video and convenience stores. DTOs and criminal groups frequently use these businesses as bases of operation for drug storage and distribution. Reporting from Atlanta HIDTA Initiatives indicates that approximately $3.3 million in U.S. currency and $7.9 million in noncash assets such as vehicles, electronics, and jewelry were seized in 2006.