U.S. Department of Justice
National Drug Intelligence Center
New York/New Jersey HIDTA Drug Market Analysis 2010
June 2010

Illicit Finance

(U) New York City is one of the world's principal financial centers and the economic capital of the United States. Hundreds of millions of dollars are laundered each year by drug traffickers operating in the NY/NJ HIDTA region. DTOs operating in the region rely on multiple methods to move and launder illicit drug proceeds, such as money transmissions through MSBs, structured deposits in traditional depository institutions, the BMPE, and bulk cash smuggling. In 2008, the latest full year for such data, the Financial Crimes Enforcement Network reported 88,113 suspicious activity reports (SARs) filed by depository institutions in New York and New Jersey.84 Further, 19 percent (101,227) of the SARs filed by MSBs nationwide (531,761) in 2008 were filed in New York and New Jersey.85

(LES) New York City is a primary location in the United States for BMPE-related money pickup operations and placement activity. Colombian DTOs routinely use the BMPE to launder illicit proceeds generated in the NY/NJ HIDTA region. A significant amount of the illicit drug funds funneled through traditional depository institutions and MSBs begin as money pickups in the region and are then placed using structured deposits for use in the BMPE to purchase goods. According to the Immigration and Customs Enforcement (ICE) El Dorado Task Force, undercover money pickup operations in the region are increasing. In Operation Triple Play, task force officers indicate that nearly $11 million was transferred through money pickups since August 2007.86 Further, a portion of bulk cash smuggled from New York across the Southwest Border is laundered using the BMPE in Mexico. Colombian peso brokers operate in Mexico, where they are able to place cash into the financial system--to avoid Bank Secrecy Act reporting requirements--and wire it to international locations, such as Panama, Hong Kong, and mainland China to purchase BMPE-related goods. As a result of proactive targeting conducted by the El Dorado Task Force through Operation Black Market Sweep, in January 2009, Hong Kong and Shanghai Banking Corporation Mexico stopped accepting foreign currency presented for deposit or exchange.87 In May 2010, several other Mexican banks adopted similar practices that will likely lead to increased money pickups in New York.

(LES) New York City is a consolidation area for bulk cash destined for Mexico. Millions of dollars in bulk cash is generated and consolidated in the New York City area for subsequent shipment to the Southwest Border or other consolidation areas, such as Atlanta, Georgia.88 Much of the bulk cash that leaves New York is generated locally; only a limited amount of drug proceeds earned by DTOs in northeastern and Mid-Atlantic states is brought to the New York City area for consolidation.89 According to NSS data, bulk cash seized in New York and New Jersey and destined for Southwest Border areas totaled more than $8 million from 2006 through 2009.90 Bulk cash cells typically move relatively small amounts quickly through stash houses to avoid significant losses from large stash house seizures.91 Mexican DTOs often maintain multiple bulk cash stash houses in a consolidation area, and cash cells rotate consolidation operations among several locations or split bulk cash shipments between several houses to keep the amount of cash at any single stash house relatively small.92 Traditional locations for stash houses in the New York City area are Washington Heights and Jackson Heights--Dominican and Colombian neighborhoods--although stash houses have been found more recently in northern New Jersey as well as Long Island, Westchester County, and Yonkers, New York.93

(LES) Mexican DTOs operating in the region typically transport bulk cash directly to the Southwest Border or transport the proceeds to other consolidation locations, particularly Atlanta and North Carolina.94 Mexican organizations frequently transport bulk cash to Mexico on behalf of Colombian DTOs and sometimes contract Dominican couriers to transport money from the New York City area to the Southwest Border.95 According to some federal and state law enforcement agencies in New York City, organizations are transporting smaller but more frequent shipments of bulk cash than in the past.96 Other law enforcement agencies report the continued movement of large bulk cash shipments to the Southwest Border. Canada-based DTOs also smuggle bulk cash drug proceeds from the NY/NJ HIDTA region into Canada, often through the St. Regis Mohawk Reservation. According to NSS data, bulk cash seized in New York and New Jersey and destined for Canada totaled nearly $1 million from 2006 through 2009.97 A review of OCDETF investigations in 2009 shows that 62 percent (31 of 50) of the investigations indicated bulk cash smuggling either to the Southwest Border or Canada.98

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