So far in the current Mexican administration the Financial Intelligence Unit (Unidad de Inteligencia Financiera, UIF) presented 174 denunciations before the PGR (Procuraduría General de Justicia, State Prosecutor’s Office) after detecting operations in the financial sector with illegally obtained funds, worth more than 91 billion Mexican pesos, reveals the response of the Ministry of Finance (Secretaría de Hacienda) by the information request solicited by Contralínea. In this same time lapse it was possible to secure 1,800.000 pesos that had been laundered in the system, reveals in an interview the Director of the Unit of Implementation of Controls on Money Laundering of the SHCP (Secretaría de Hacienda y Crédito Público, the Ministry of Finance and Public Credit) Alberto Elías Beltrán.

From the 1st January 2015 to the 26th of January 2015 the UIF –a dependency of the SHCP- presented 174 denunciations against institutions of the financial sector, including banks for alleged crimes of operations with illegally obtained funds, also known as Money Laundering.

The accusations raised against the PGR represent a total amount of 91,865,000,000 pesos, reports the Ministry of Finance in response to the information request No. 0000600025115, made by Contralínea in accord with the Federal Law for Transparency and Access to Information.

In addition to this, so far as this six-year mandate goes, and derived from the denunciations before the UIF, 1,800,000,000 pesos were secured, affirms in an interview Alberto Elías Beltrán, Director of the Unit of Implementation of Controls on Money Laundering of the SHCP.

There are more than 90 billion pesos related with recent denunciations along a period of 2 years and 1 month, which represent 84% of the denounced amount of the same UIF for the six years term of Felipe Calderón, -109,254,173,000 pesos- when allegedly a “war” against organized crime was being held. The worst year was 2012 when only 35 denunciations were made for 3 billion pesos.

In that regard Alberto Elías Beltrán comments that during the last year of the government of Calderón only about 355 million pesos were secured. “A small quantity” considers the public servant.

In an interview he outlines the results of the current administration. In 2013 84 denunciations were presented, among which by the actions of the Attorney General´s Office around 800 million pesos were secured; he adds that last year 87 denunciations were made and around 1 billion pesos secured.

Alberto Elías Beltrán indicates that this has been achieved by the new legal framework operating in the Financial Intelligence Unit, the same that allowed the SHCP to have a major visibility in matters of the fight against money laundering, in the past it only gathered information of financial entities.

Thus according to official data delivered to Contralínea by the SHCP indicate that from the 1st January to the 31st December 2013 84 denunciations were presented against financial institutions operating in Mexico, which accounted for a total amount of 28,005,000,000 pesos. Additionally from the 1st of January to the 31st of December 2014 87 denunciations for 59,384,000,000 pesos were made, and from the 1st to the 26th of January 2015 there were three denunciations worth 4,476,000,000 pesos.

The director of the Unit for Implementation of Controls of Money Laundering of the SHCP explains to Contralínea that the denunciations presented to the UIF before the Attorney General´s Office are duly supported: they are robust, solid denunciations that allow the Public Prosecutor’s Office to act rapidly and with more elements in their hands.

In some cases as details the public servant, this allows the PGR to save time, as the Ministry of Finance is empowered to request the National Banking and Exchange Commission (Comisión Nacional Bancaria y de Valores) for information, thus supporting the denunciations of operations already considered by the SHCP as linked to illegally obtained funds.

Elías Beltrán adds that the money laundering is a very sophisticated offense that requires to merge different elements of other offenses, as it is very difficult to have direct evidence: “It has to be shown with circumstantial index-related evidence, obviously everything has to be dealt in the legal framework and in accordance with the Human Rights enshrined within the (political) Constitution (of the United Mexican States).”

Nevertheless for the researcher Jorge Retana Yarto, a specialist on national security related intelligence and a Master´s Graduate in Engineering, despite the fact that a Law of Identification of Operations with illegally obtained funds has been drafted and enacted, which is far more complete than the previous one, as it included “vulnerable sectors” not taken into account before, as art galleries, foundations, commercial operations in cash, guarantee and insurance companies, as well as more cash operations in US dollars in commercial banks, there is no systematic multifaceted action and among a large number of specialists going behind money preceding from transnational criminal organizations.

This is due, he advocates, to the modus operandi and predominant means for the struggle, equally in the last administration as the in the current, being the aimed confrontation against criminals, the capture of their leadership and not a dominant attack to the financial structures, which in accord with the treaties signed by Mexico in the International Financial Action Group (Grupo de Acción Financiera Internacional, GAFI) should be confronted by the Financial Intelligence Units.

For the author of the book The transnational Empire of Mafias (El Imperio de las Mafias Transnacionales) and Transnational Mafia and criminal economy: Mexico in the orbit of a parastatal power (Mafia transnacional y economía criminal: México en la órbita de un poder parastatal), action proceeds reactively before concrete denunciations, whereas the possible seizures are about existing money in discovered “safe-houses” or when a leader of the criminal organizations is captured alongside his treasurer. In this regard the US authorities indicate that from 2002 to 2014 Mexico managed to secure only 500 million dollars.

The Master’s Graduate Jorge Retana considers that in such cases they don’t manage to weaken remotely the criminal financial structures, which are very powerful. The same happens with the Asset Forfeiture Law (Ley de Extinción de Dominio), says the researcher; improved but scarcely applied because of the predominance of the armed struggle against the organizations.

Mexico, the Center for Money Laundering

Annually the US State Department denounces through the International Narcotics Control Strategy Report that the Mexican financial system is a center of money laundering in the benefit of organized crime, where as it estimates that between 19 billion and 29 billion pesos are laundered in Mexico every year.

The aforementioned amount was reaffirmed the past 9th of March by the US Deputy Attorney General Keneth Blanco, when he assured that the organized crime launders 29 billion dollars a year in Mexico as in the United States (Victor Cardoso, La Jornada, 10th March 2015).

In this regard Alberto Elías Beltrán disqualifies the amount by indicating that there is no methodology endorsed by the GAFI, under which such a calculus would be based in, not even the estimate on how much money is laundered in Mexico or in any other country. Therefore he assures that the Mexican financial system can be fully trusted, that the control established by the Anti-laundering Law has shown positive results in matters of prevention as in the fight against that activity.

He adds that money laundering is an offense affecting equally all countries and thereby the GAFI has to establish the international standards concerning prevention and fight against the two criminal phenomena: Money Laundering and Funding of Terrorism.

Notwithstanding the 2014 Report –the latest to be released to the date- the US State Department warns that Mexico is considered an important producer of illegal drugs as well as a transit country for these, furthermore that the benefit of the illegal drug traffic destined to the US is the main source of laundered funds throughout the Mexican financial system.

He adds that the other important source of funds of illicit origin which are laundered within the financial system include corruption, kidnapping, extortion, piracy, trafficking of humans and of firearms. According to US authorities the drug trafficking organizations alone sent between 19 billion and 29 billion dollars annually from Mexico to the US.

The Master’s Graduate Retena Yarto indicates that the instrument against laundering of funds of illicit origin is a broad highly specialized, systematic financial intelligence along with justice prosecuting institutions with administrative capacity to act according to the size of the problem.

In an interview the researcher observes that the failure of the institutions in the struggle against money laundering makes the criminal organizations extremely difficult to overcome as it provides them the capacity to resist the armed attacks from the state, and to counter-attack and expand into other regions of the continent (Central and South America).

Furthermore he says it gives them the extraordinary power of bribery, corruption and criminal association, in private enterprises as with high-ranked public servants. Thereby he assures that the current strategy is doomed on the long term, as it is wrong and socially very costly, only hidden behind media blows.

Concerning the cases of the captures of JoaquínGuzmán Loera El Chapo and Miguel Treviño Morales the Z-40, he asks: “What have been the consequences in matters of hitting its financial structures? Nobody knows noting, nor is it known if they have been targeted. Subsequently the other face of the strategy is the public exhibition of “media coups” in order to change the social perception in this issue. Still this cannot be a serious, systemic, multifaceted and effective strategy to hit in depth the financial power of transnational crime.

Inside the PGR, poor results

Beyond the media coups, the results that the PGR produces seem far from overwhelming. In the evaluation No. 1207 about “Public Security Policy” drafted by the Audition General of the Federation (Auditoría Superior de la Federación, ASF) and published last February, shows that the UIF presented 316 denunciations for Money Laundering by the financial sector from 2007 to 2013. Out of these 51,9% (164 cases) were pending to be dispatched by the PGR; 35,4% (112 cases) was assigned to the competent court and 12,7% (40 cases) remaining without consignment, because of the determination of non-execution of the criminal action, the accumulation of pretrial investigations or the determination to send it to the shelve. These 316 denunciations implicated 1,873 financial institutions, he specified.

The latter despite the UIF delivering conclusive files about the illegal origin of the money.

With regard of the status kept by the resulting pretrial investigation of the presented denunciations by the UIF before the PGR, the ASF indicates that those consigned before the competent legal authority have risen by 91,7%, going from 12 in 2007 to 23 in 2013, in contrast the dispatched pretrial investigation which were not consigned, declined by 20% from 5 investigations in 2007 to 4 in 2013.

He adds that despite the fact that the pretrial investigations which have not been consigned before a judge, in relation with the effectively consigned pretrial investigations have declined, the number of pending pretrial investigations increased 6,1times in this period, going from 8 in 2007 to 57 in 2013.

In an interview Alberto Elías Beltrán explains that the work of the UIF includes the coordination with the enforcement authorities of the procurement of justice. Once the denunciations are presented, he specifies, the PGR is in charge of integrating the files, thus he points out its importance in the fact that Mexico relies on qualified and specialized staff in the subject, not only inside the Ministry of Finance, but also in the PGR and in the Judicial Power.

According to the public servant with the new ant-laundering law Mexico has a much more robust regimen and major coordination. “Results are being delivered. It hasn’t been easy because this is a change, a process which has been carried out with this purpose of taking down as many assets as possible from the organized crime, but also with the purpose of obtaining condemnatory sentences and seizure determinations. We are working on it, it is just the beginning, but it is a process. Hence we don’t have to forget that there have been a number of sentences on the states level, as there are several federal entities which are already regulated in their legal framework the penal model of money laundering.

Elías Beltrán assures that “in the (GAFI) evaluation, which will be held in 2017, the result of the efficiency will be very good and we will be position ourselves internationally much better than now. Today we are well established within a prevention and combat regimen against money laundering, but maybe are lacking the efficiency: where Citizen see that we are indeed effective in all this fight derived from the process of law modifications and the training of who participated in it.”

However Retana Yarto observes that the current financial system is unconceivable without the huge amount of funds originated from transnational criminality, merging with licitly originated funds until they accomplish to make “disappear” its real source.

“If you sum up the value of the various markets of criminal products and services you reach a number close to 4,5 billion dollars annually, which are not in a pit, but rather are in the set of the international financial system. Thus has it been a sub-product of globalization, integration and liberalization of the financial markets as a model for international finance. Therefore in most of the developed countries money laundering is punished unequally: it punishes the one who deposits illicit money in banking or trading systems but not the institution receiving and moving it profit-oriented, who always adducing “problems of instrumentation of the regulation” internationally recognized to avoid problems, or flaws in the responsibility of banking officials on duty in charge of its instrumentation, and they assume the fine. There are no bankers or high-ranked public servants imprisoned: there is an absurd asymmetry, but such is the international tendency in this regard. In reality the banking institutions are protected by this kind of legislation, shielded, they have a certificate for semi-impunity”.

The researcher refers to the fact that in this issue of money laundering the high commissions paid by the treasurers of the transnational organizations of organized crime: summing up between 10 and 25% of the deposited money on invested amount for its legitimacy. It is very high and almost everyone takes the risk of accepting illicit money because internally they know how the laundering proceeds.

Concerning the warranties that the formal sector (including the financial system) does not participate in criminal actions as the launderer of assets, he points out there is none. “Under the conditions of an economy with structural flaws as is the Mexican one is, where small and medium-sized companies (despite the fact that annually the delivered funds for their productive plans are nominally raised) remain in a state of alienation, the illicit funds are a great temptation for businessmen and a huge window of opportunities for the treasurers of the organizations”.

On this point he asks: “What happened with the 3,500 enterprises which are said to be controlled by the Sinaloa Cartel? How did he manage to get them? Which are they and what sector do they belong? Nothing, (there is) simply nothing. We don’t forget that transnational organized crime as the Mafia, in the conditions of a parastatal organization, occupies those places which the state manages poorly or not at all, as being part of its social responsibilities”. Concerning what needs to be done in Mexico to fight the illicit funds, Renato Yarto lists the following: a) to change the current strategy; b) to bring to bankruptcy the financial capacity of the transnational criminal organizations; c) that the “assistance and training” plans that exist with the USA and other countries (recently one was signed with the United Kingdom) include a substantial number of specialists on money laundering and in the execution on the State or regional level UIF; e) to generate the institutional capacity (legal authorities and specialized judges on money laundering) to attend systematically this issue; f) to create –as in other countries- not only a cybernetic police but also a financial police, assisted by an army of specialists, several UIF more and some specialized tribunals. Without this the degree of application the current framework would be almost non-existent or useless; g) to upgrade to a category of subject of National Security the fight against this phenomenon.

Nancy Flores, @nancy_contra

(Translated by: Axel Plasa)

Versión en español

Contralínea 429 /  22 – 28  March 2015