Money laundering has always been a great way for crime organizations to acquire their illegal profits. Some of these organizations are called cartels, which enforce and make shady dealings, generally over illegal goods. They aim to launder their illegal money daily, so their machinations would continue on a regular basis.
When it comes to different cartels, the name "Sinaloa" has a bad reputation. This notorious Mexican cartel has been active since the end of the 1980s and continues its illegal activities throughout the globe. The profit they have been acquiring through illegal activities makes up a great part of money laundering deals. That is why AML compliance programs have an important role while standing against Sinaloa and many other cartels.
In this text, we will take a look at how the Sinaloa Cartel works and attempts to launder its illegal profits. Also, the effort to stop Sinaloa's shady works through AML compliance will be in the spotlight.
A Brief History of the Sinaloa Cartel
The Sinaloa cartel is a Mexican criminal organization that has been involved in the production, distribution, and sale of illegal drugs for decades. Founded at the end of the 1980s by drug lord Joaquin "El Chapo" Guzman, the cartel has grown to become one of the most powerful and influential drug trafficking organizations in the world.
El Chapo was able to evade capture for many years, and the Sinaloa cartel continued to grow and expand its operations. He became famous for his prison breaks, especially the time when he constructed an escape tunnel that was equipped with oxygen and lighting.
In 2016, El Chapo was finally arrested and given back to the United States, where he is currently serving a life sentence. However, his cartel has continued to operate, but its power and influence have decreased due to the loss of its leader and ongoing law enforcement efforts.
Money Laundering Attempts of the Cartel
The Sinaloa cartel has been known to use a variety of methods to launder its illegal profit. Some of these methods include using front companies to conduct transactions, moving money across international borders, and using intermediaries to make transactions on their behalf.
During El Chapo's trial, the prosecution presented evidence that he had used a network of front companies and intermediaries to conduct transactions on his behalf, as well as moving money across international borders to avoid detection.
"Structuring" is one of the methods which is frequently used by the Sinaloa cartel. By depositing their profits into smaller amounts, no more than $10,000, they aim to evade Bank Secrecy Act (BSA) regulations. This method is the most popular but also the one with the largest frequency of failure. Because of that, the Sinaloa cartel has begun to make use of different methods of money laundering, sometimes with the help of a mole in the financial institutions and, once, a whole bank itself.
HSBC: A Top Bank Made Dirty
HSBC is one of the largest banks in the world, with operations in multiple countries. In 2012, the bank reached a settlement with the United States government after it was found to have failed to properly monitor its customers' transactions, leading to accusations that it had facilitated money laundering by the Sinaloa cartel.
As part of the settlement, HSBC agreed to pay a fine of $1.92 billion and implement a number of measures to improve its anti-money laundering procedures. The bank also admitted that it had not adequately monitored its customers' transactions and that it had failed to implement effective controls to prevent money laundering. Despite these measures, the bank has continued to face criticism for its lack of effective action against money laundering. There are still many money laundering attempts that are being handed out with the help of a top organization, and sadly, HSBC still continues to be one of these organizations.
Current State of the Cartel
In recent years, the Sinaloa cartel has been working to establish a presence in Europe, particularly in the United Kingdom and Spain. This expansion has been aided by the cartel's growing ties to organized crime groups in Europe, as well as its use of new technologies to facilitate the transport of drugs and money. The cartel has also been seeking to establish new markets for its drugs, particularly in China, where there is a growing demand for synthetic drugs. Despite these efforts, the Sinaloa cartel continues to face challenges, including increased law enforcement efforts and competition from other drug cartels.
AML Regulations Against the Cartel
Putting an end to Sinaloa's money laundering attempts has been one of the most important missions of international financial crime and AML institutions. The Mexican government has been forcing AML laws since 2013. These laws are written in concordance with Financial Action Task Force (FATF) and European Union (EU) regulations on AML. With these laws, Mexico aims to combat illegal activities and minimize its high crime rate.
One of the key ways that AML regulations aim to combat money laundering by the Sinaloa cartel is by requiring financial institutions to conduct due diligence on their customers. This includes identifying and verifying the identity of customers, as well as monitoring their transactions for any suspicious activity. Financial institutions are also required to report any suspicious activity to the relevant authorities, which can then investigate and take action against the individuals or organizations involved.
One recent example of this is the case of Humberto Loya Castro, who was sentenced to nine years in prison in the United States for his role in laundering money for the Sinaloa cartel. Loya Castro had used a network of front companies and intermediaries to conduct transactions on behalf of the cartel, as well as move money across international borders. He was charged with money laundering and conspiracy to distribute drugs and was ultimately found guilty and sentenced to prison.