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| Courtesy: ICE |
| US Immigration and Customs Enforcement, working with law enforcement authorities in Colombia, made an initial seizure on September 10 of $11.2 million from a shipment at the port of Buenaventura, Colombia. Subsequent investigations revealed additional shipments in Buenaventura and Manzanillo, Mexico, with large amounts of cash hidden inside. Total haul: more than $40.5 million. |
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Analyst, Complinet, Ltd.
In April President Barack Obama traveled to Mexico to meet with President Felipe Calderon and discuss the drug-related violence that had begun to spill over into the United States even as the Mexican Army pressed its fight against the country's murderous cartels that operate along the border. One reality was made abundantly clear to Obama and his cadre: Mexico will not be able to make meaningful progress until the United States finds a way to damn the river of drug money and arms that flows southward across the Rio Grande, fueling the cartels' private armies.
At the time, DHS Secretary Janet Napolitano noted that discussions with Mexico were not about pointing fingers, but about solving a common problem. "What can we do to prevent the flow of guns and cash south that fuel these cartels?" she asked rhetorically. What indeed. Until that question is answered, there will continue to be a serious national security threat lurking along the entirety of America's southern border.
At the heart of the dilemma is a practice known as "bulk cash smuggling". Thanks to regulations that stem from the Bank Secrecy Act and the USA PATRIOT Act, US financial institutions are doing a decent job of detecting and reporting transactions involving drug money. As a result, money launderers that attempt to move the proceeds of US drug sales through the formal financial system run a grave risk of having the money seized and forfeited -- not to mention of being indicted and landing in federal prison. Of course, prison may be the least of a laundryman's worries if he has just lost millions of dollars belonging to a ruthless drug trafficking network.
As a result, the drug cartels and their money launderers seem to be reverting to a more fundamental method of washing their ill-gotten gains -- bulk cash smuggling. While such smuggling can take place on commercial flights, the amount of money moved through the air is miniscule when compared to the sums that are smuggled over land routes.
First, the drug trafficking networks must transfer their cash from all across the United States to a staging area near the US-Mexico border. This is typically done by smuggling the cash in vehicles with hidden compartments or depositing the cash into an account at a nationwide bank in one city and quickly withdrawing it from the same bank's ATMs in a city near the border. Alternatively, the cash can be wired via Western Union, MoneyGram or a similar service.
In any case, once all of the cash is amassed in one location near the border, it is secreted for its ride into Mexico. It is typically hidden within concealed compartments in tractor-trailers or personal vehicles for the drive across the border. Once in Mexico, some of the cash is used to fund local trafficking networks and some continues on a southward journey to Colombia where it is used to pay suppliers. The rest of the cash is placed into Mexican banks and casas de cambio -- currency exchanges -- with the help of bankers and cambistas who are willing to turn a blind eye to the source of the money for either hefty commissions or outright bribes.
Unfortunately, the Mexican banks and casas de cambio often maintain accounts at US financial institutions and use armored car services and even bagmen to transport the dirty cash back into the United States for deposit into those accounts -- thoroughly laundered. In fact, these couriers even report the cash to Customs when crossing the border. In 2006, the US Treasury Department's Financial Crimes Enforcement Network put out an advisory warning US financial institutions to be on the lookout for this kind of activity.
"Once the US currency is in Mexico, numerous layered transactions may be used to disguise its origins, after which it may be returned directly to the United States or further transshipped to or through other jurisdictions," the advisory stated. "This advisory warns US financial institutions of the potential misuse of relationships with US financial institutions by certain Mexican financial institutions, including Mexican casas de cambio."
The Department of Homeland Security is keenly aware of the threat posed by bulk cash smuggling and has acted to combat it, as has Congress. The USA PATRIOT Act made bulk cash smuggling -- knowingly smuggling more than $10,000 out of the United States -- a federal crime. US Immigration and Customs Enforcement, the largest investigative agency in DHS, makes good use of the resulting BSA statute, Title 31, US Code, Section 5332.
Through a program known as Operation Firewall, ICE has partnered with US Customs and Border Protection to target "the full array of methods used to smuggle bulk cash, including commercial and private passenger vehicles, commercial airline shipments and passengers, and pedestrians crossing US borders with Mexico and Canada", according to ICE. Since its inception in 2005, Operation Firewall has resulted in roughly 524 arrests and 3,275 seizures in the United States and abroad totaling over $260m.
Last month, ICE special agents along with their Colombian and Mexican counterparts seized more than $41m in US currency that was hidden in shipping containers found in Colombian and Mexican ports. While this was a successful seizure, it served as a reminder that despite Operation Firewall's efforts, the drug trafficking network in question still managed to smuggle $41m out of the United States into Mexico and in some case on to Colombia.
While ICE, CBP and Operation Firewall have made strides in combating bulk cash smuggling, it is clear that much more progress must be made if US and Mexican officials hope to put a chokehold on the cartels' finances. While more boots on the ground at border checkpoints might help, there is no easy solution to this growing problem. Still, DHS Secretary Napolitano and her people are going to have to come up with creative solutions or there will be no end in sight for the war Mexican soldiers are waging against a well-financed, well-armed enemy. And while US soldiers are not fighting that war, America's national security rests on the outcome.
As Treasury Department Assistant Secretary for Terrorist Financing David Cohen told a group of bankers in mid-October, "the flow of drug proceeds and weapons across our southwest border is fueling violence in Mexico, and the criminal activity that it supports threatens the security of both Mexico and the United States". Cohen added that there is evidence that organized crime groups are cooperating with terrorists. While Cohen did not name the organized crime groups purportedly involved in such activity, Mexico's murderous cartels and their Colombian counterparts would seem to be likely candidates. If this intelligence bears out, it is safe to say that the stakes could not be higher; DHS must act now to damn the river of bulk cash that is flowing across America's southern border.
UPDATE 10-22-09: There are signs that US law enforcers have taken steps to bolster their fight against the smuggling of bulk cash and firearms southward across the US-Mexico border. Earlier today, the DEA, FBI and ICE announced a massive, multi-agency law enforcement effort dubbed "Project Coronado", which began in 2006 and as of today has led to the arrests of nearly 1,200 US-based members and associates of Mexico's brutal La Familia Michoacana drug cartel, many of them in Texas. Roughly $32.8m, much of it bulk cash the ring allegedly planned to smuggle across the border, was seized by law enforcement authorities during the operation, as were 389 firearms and other weapons.
Brett Wolf is an anti-money laundering analyst with Complinet, a London-based firm that helps financial institutions meet their compliance obligations. He has been writing about financial crime for more than a decade and holds an anti-money laundering certification from the Florida International Bankers Association and Florida International University.
According to US Customs and Border Protection and the Department of Homeland Security, more than 11 million maritime containers arrive in United States seaports each year an average of 32,000 a day. Only a fraction of these containers are ever inspected, presenting terrorists with tens of thousands of opportunities each day to smuggle weapons of mass destruction into the country. Bottom line: the organizations charged with managing the security of our ports and borders lack the necessary data to screen the cargo, personnel, businesses, vessels, and infrastructure involved in the global maritime supply chain for potential threats to our security.
The Implementing Recommendations of the 9/11 Commission Act, signed into law in 2007, established a mandate to screen all US-bound maritime cargo for terrorist threats by July 1, 2012. However, the mandate has been criticized by business groups who fear that screening all containers would severely restrict the flow of global maritime commerce, and there are doubts that the Department of Homeland Security will be able to meet the deadline.
While comprehensive cargo screening continues to be debated, the effort to enhance maritime security is shifting focus to the development of a global Maritime Domain Awareness (MDA) initiative spearheaded by the United States Navy, the Coast Guard, and other critical federal and state and local agencies.
MDA is defined as the understanding of everything associated with the global maritime environment that could impact the security, safety, economy or environment of the United States and the global maritime supply chain. When achieved, MDA will provide homeland security professionals across agencies and jurisdictions with the actionable intelligence they need to detect and respond to maritime-based threats.
The creation and implementation of a successful MDA program faces several stiff challenges. The governments ability to achieve MDA will be challenged by its ability to collect massive amounts of data relating to the global maritime supply chain, analyze that data to develop actionable intelligence, and disseminate the results responsibly and efficiently to a vast group of national defense and homeland security organizations, law enforcement agencies, and coalition forces.
As imposing as these challenges are, they are not insurmountable. For decades the private sector has leveraged systems that facilitate the analysis of large amounts of data to help anticipate threats to their business and to effectively manage risk. Based on the experiences of these organizations, a roadmap to overcoming the challenges of MDA can be developed.
First, the government should begin by cataloging, understanding and planning for the various domestic and international data sharing processes, procedures and requirements that will dictate the use of the data that will be collected. Additionally, data policy/data sharing principles should be built directly into the overall solution, thereby facilitating responsible information sharing among agencies.
Second, the government must build and operate an effective data supply chain. This requires the development of pipelines of MDA-related data from private companies, public organizations and foreign countries to the US government. This will require the development or leveraging of relationships with thousands of local and global maritime companies and institutions. Additionally, this data supply chain will have to be constructed in such a way as to enable daily data collection and the ongoing examination of data sources to ensure accuracy and integrity of data.
Third, the government must develop and employ a data fusion system capable of ingesting, cleansing and analyzing all maritime data on a single platform for real-time anomaly detection and threat assessment. As a result, the system must be engineered to address large-scale, disparate data problems at levels of performance unattainable through traditional computing architectures and relational databases.
Finally, the government should seek partnerships with organizations and individuals and invest in technologies and solutions that are on the leading-edge of data processing and analysis and reflect expertise in navigating critical data privacy laws. By partnering with these organizations, the government can draw upon advanced technologies, in-depth understanding of the various legal, regulatory, data privacy, and policy issues and expertise in data analysis that will ensure successful execution of MDA operations.
Haywood Talcove is the CEO of LexisNexis Special Services, Inc. For LexisNexis MDA solutions click: http://www.lexisnexis.com/government/solutions/intelligence/maritime.aspx
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