Mexican President Enrique Pena Nieto announced last week that Mexican businesses will no longer have a dollar cap on cash deposits. The monthly limit of $14,000 in cash deposits was instituted by the former president Felipe Calderon as part of his country’s efforts to deter money laundering that was part of Mexico’s violent drug warfare.
Strict limits on cash deposits have been in effect since 2010, but President Pena Nieto asserts that the limit is unfairly punishing honest border businesses.
Businesses may exceed the limit as needed if they agree to increased monitoring of their financial transactions and related transparency measures. Businesses must also have been established for a minimum of three years to avoid the cash-limit regulation.
Depsite concentrated efforts to contain the nation’s drug cartels, the problem persists, and money laundering operations are central to the profit taking. U.S. federal officials last week carried out major enforcement operations in Los Angeles, which according to Assistant U.S. Attorney Robert E. Dugdale, has become “the epicenter of narco-dollar money laundering” for Mexican cartels and other international drug dealers.
According to federal authorities, trade-based money laundering is a favorite tactic, and a raid Los Angeles’ fashion district resulted in the seizure of over $100 million. The individuals arrested are expected to face federal charges of conspiracy to launder money and various other charges.
The emphasis on trade-based money laundering will require careful attention to customer due diligence (CDD – KYC) and CDD software solutions that will allow institutions to analyze and authenticate customers, their related parties, PEPs, and ultimate beneficial owners.