Arrest Shows Money Laundering Practices Die Hard

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The recent arrest of two Mexican nationals in Colombia illustrates that old money laundering practices die hard, an investigative report by the Tijuana-based Zeta says.

Omar Guadalupe Ayon Diaz and Osvaldo Contreras Arriaga were arrested in Cartagena, Colombia, on August 19, Zeta reported, and charged with money laundering and criminal conspiracy, among other charges.  

The two men, identified as members of the Sinaloa Cartel, are also wanted by Interpol and both the US and Mexico’s Attorney Generals’ Offices. It’s not clear where they will be tried.

SEE ALSO: Coverage of Money Laundering 

Drawing from the US indictment of the two men, Zeta says that Ayon Diaz and Contreras Arriaga used multiple “casas de cambio,” currency exchange houses, in Tijuana to launder money tied to the Sinaloa Cartel’s drug trafficking. In less than two years, Ayon Diaz and Contreras Arriaga laundered over 45 million dollars, the report says.

Much of this was accomplished by transferring illicit financial earnings between Mexico and United States banks. Intelligence officials told Zeta that Ayon Diaz and Contreras Arriaga also worked directly for the Lira Sotelo family, known drug traffickers since 2007.

InSight Crime Analysis

There are a couple of surprises in the Zeta report. The first is the continued use of “casas de cambio.” While once a common strategy in money laundering amongst Latin American drug trafficking organizations, it was thought to be out of style, and something that was too well known and therefore too risky for the criminal groups.

However, by all appearances, Tijuana remains a hub of this sort of activity. As the Zeta report says, there are approximately three hundred currency exchange centers in Tijuana, a fourth of all exchange houses in all of Mexico.

SEE MORE: Sinaloa Cartel News and Profiles

Mexico’s weak legislation facilitates this practice. By exchanging money in sums smaller than $500, drug trafficking organizations are able to move financial resources without governmental oversight.

The second surprise in the report was the way in which Ayon Diaz and Contreras Arriagas operated seemingly independently. While the report says they managed some of the Sinaloa Cartel’s drug trafficking proceeds, it also says they had a relationship with the Lira Sotelo family, which was an affiliate of the Tijuana Cartel.

The Tijuana and Sinaloa Cartels battled for control of that border city for years. Sinaloa was thought to have won that fight, but it appears to have accommodated at least some of its vanquished foes.

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