Mexican authorities are struggling to cope as cartels adopt crypto. The Mexican authorities have reported a rise in the use of crypto assets to launder criminal syndicates funds in Latin America. In a Dec. 8 report from Reuters, the head of Mexico’s finance ministry’s financial intelligence unit, Santiago Nieto, described how cartels use crypto to launder money obtained in illegal activities.
Neito claims that Latin cartels usually put their illegal gains on different bank accounts at less than $7,500—a threshold that would cause banks to flag a transaction. The funds are then used to make a multitude of small amounts of Bitcoin (BTC) that can then be exchanged frictionlessly across borders.
The 2018 law required that licenced crypto trading platforms record transactions over 56,000 Mexican pesos (approximately $2,800). Local authorities hope that this will enable them to adapt to the use of digital assets in organised crime.
The arrest of human trafficker Ignacio Santoyo in April 2019 was attributed to the statute, with the authorities identifying that Santoyo and his sister had obtained over $22,000 of BTC in the Bitso local exchange.
Hector Ortiz, the accused leader of Mexican cyber-hacking syndicate Bandidos Revolution Team, was similarly arrested after law enforcement identified he spent “tens of thousands of dollars” worth of BTC, giving investigators cause to trace his locations using cell phone data.
However, Rolando Rosas, the head of the Mexican attorney general’s office’s Cyber Investigations Unit, told Reuters law enforcement lacks the resources needed to tackle cryptocurrency-fueled money laundering. He said the unit has 120 staff — about a quarter of what is required — and it struggled to keep up with the 1,033 Bitcoin threshold alerts that were triggered on registered trading platforms this year.
Approximately 98% of the transactions were reported by Volabit — an exchange operating in the Jalisco New Generation Cartel’s home state of Jalisco. Volabit’s general director Tomas Alvarez told Reuters “It is a mistake […] to assume that since the alerts are generated by a company based in Jalisco, they must correspond to residents of Jalisco […] we have users from all over the country. In fact, most of the reports are not from users who live in Jalisco.”
[image: Jezael Melgoza]