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Illicit Finance

Law enforcement officials estimate that billions of dollars of illicit drug proceeds are generated in or pass through the Chicago HIDTA region annually. Drug traffickers use the region's highly developed financial and transportation infrastructure to launder and transport these proceeds to drug source locations, primarily along the Southwest Border. Bulk cash smuggling is the primary method used by traffickers to move drug proceeds from Chicago; however, traffickers also use banks, money services businesses (MSBs), the Black Market Peso Exchange (BMPE), mortgage fraud, and cash-intensive businesses to launder drug proceeds in the region.

Bulk cash derived from illicit drug sales in the HIDTA region and in surrounding drug markets is typically transported to Chicago, where it is consolidated by Mexican DTOs for shipment to locations along the Southwest Border or in Mexico. Currency is often concealed in hidden compartments in private vehicles or commercial tractor-trailers and, to a lesser extent, transported by couriers on trains and buses. Law enforcement reporting indicates that use of package delivery services for the shipment of bulk cash may be declining in the Chicago area.

Traffickers in the HIDTA region often use MSBs and bank services such as wire remittances, automated teller machines (ATMs), and Internet banking to move and launder drug money. Traditional bank accounts are also used by drug traffickers to launder illicit funds; traffickers typically deposit drug proceeds in the Chicago HIDTA region and have associates in other states or other countries withdraw the funds from the account using ATMs. Various MSBs also offer traveler's checks, money orders, and stored value cards, which traffickers use to launder money. Money order purchases under $3,000 do not require identification, a circumstance that is exploited by traffickers who purchase money orders at multiple locations in amounts under the reporting threshold. The money orders are then sent by courier or package delivery service to other locations (domestic and foreign) for deposit in financial institutions.

Colombian traffickers in the HIDTA region sometimes use the BMPE to launder drug proceeds. In this system, Colombian traffickers receive Colombian pesos in Colombia in exchange for U.S. drug dollars located in the United States. Brokers then sell the U.S. dollars located in the United States at a discount to Colombian merchants, who use the funds to purchase U.S. goods.

Street gang members operate businesses and engage in mortgage fraud schemes to launder drug proceeds. Gang members and other drug traffickers use cash-based businesses such as beauty salons, car washes, and used car lots to commingle drug proceeds with legitimate business revenue. Gang members also employ mortgage fraud schemes that involve straw purchasers and unscrupulous mortgage brokers and appraisers to purchase property at a minimal cost and sell it at a higher value to a third party. Gang members also use drug proceeds to purchase luxury vehicles and jewelry.

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