Follow the Drug Money to Cash-Intensive Enterprises - Albuquerque Journal

Follow the Drug Money to Cash-Intensive Enterprises

The southwest border of the United States presents significant law enforcement challenges. New Mexico’s border, especially, is a hub for smuggling of contraband and cash, both of which are laundered, to a large degree, via businesses that pose a high risk because they are small and operate on a cash basis.

Law enforcement authorities and New Mexico’s state government should consider creative steps to curb illicit activity.

A sparsely populated state with limited geographic barriers to illegal cross-border activity, New Mexico presents real topographical challenges in the war on drugs and money laundering.

The three official ports of entry and six additional checkpoints along a 180-mile border of mostly uninhabited desert, coupled with the state’s extensive road network, allow criminals and drug traffickers easy access to the state and ultimately to destinations around the country.

New Mexico’s territory is regularly violated by smugglers who ship controlled substances by car, aircraft, bus and rail. Drug traffickers transmit a wide variety of drugs over these routes, including cocaine, heroin and methamphetamine.

Three interstate highways provide easy access to other parts of the country: I-10 and I-40 provide east/west access from California to the East Coast, while I-25 provides north/south access from Las Cruces to Colorado and Wyoming.

These arterials, along with others, facilitate transfer of drugs into the U.S. and of the proceeds of crime into Latin America. While these illgotten gains are extremely difficult to trace, it is known that money is often laundered through cash-intensive businesses, money service bureaus, banks and legitimate businesses.

It is important to understand that in 2009, businesses with five employees or fewer constituted more than 85 percent of the corporations in the southern half of the state, including Albuquerque, and these “small” businesses generated over $15 billion in annual sales volume.

Money service businesses, sometimes called casas de cambio, are popular in New Mexico. Las Cruces alone has over 200 of these “banking” facilities, and many operate from private residences and offices. Other similar-sized cities average five to 10 such facilities.

Most money service businesses are not registered with state and federal government authorities or FDIC insured. State officials should consider starting a campaign against unregistered money service businesses to get a large bang for their buck.

New Mexico also has 14 Native American casinos that process billions of dollars annually, and the industry is almost entirely unregulated by state and federal authorities.

In 2009, New Mexico’s casino/gaming establishment earned more than $454 million in revenue, much of it in cash. While this is not necessarily nefarious, the lack of regulation is a major hole in the financial industry.

Better compliance by casinos and sharing of information with law enforcement can be incentivized, and there are several resources these casinos can avail themselves of, including the Financial Crimes Enforcement Network, which issues guidance to casinos around the country.

Finally, the transportation sector poses a tremendous risk.

New Mexico’s vast road network provides easy access to casinos, banks and money service bureaus. Illicit goods and the proceeds of crime flow easily into and out of the U.S. because of New Mexico’s location along the border. In 2009, more than 3,100 transportation companies operated in the southern portion of the state. New Mexico’s government should bolster its involvement in and funding of projects like Operation Firewall, a joint Customs and Border Protection/Immigration and Customs enforcement initiative that has netted almost $500 million in smuggled cash.

As Santa Fe considers the most effective way to muster its resources to fight drugs and money laundering, it will be crucial to destroy the infrastructure with which illicit actors launder their money and move their contraband.

Going forward, government policymakers and law enforcement officials will need to employ an effective strategy that hits drug trafficking organizations where it hurts. As the old adage goes, follow the money.

Avi Jorisch, a former U.S. Treasury official, is president of the Red Cell Intelligence Group (www.redcellig. com) and the author of “Tainted Money: Are We Losing the War on Money Laundering and Terrorism Finance?”

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