US Drug Agency Launders Drug Money in Sting Ops: NYT

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The New York Times published a front page article this weekend on how the U.S. Drug Enforcement Administration (DEA) launders millions of dollars for the Mexican drug cartels as it attempts to track the money and arrest the top bosses.

The frustrating part:

It is not clear whether such operations are worth the risks. So far there are few signs that following the money has disrupted the cartels’ operations, and little evidence that Mexican drug traffickers are feeling any serious financial pain. Last year, the D.E.A. seized about $1 billion in cash and drug assets, while Mexico seized an estimated $26 million in money laundering investigations, a tiny fraction of the estimated $18 billion to $39 billion in drug money that flows between the countries each year.

I’d like to know how they run the cost-benefit analysis on these operations. Is it worth laundering $10 million in order to seize a $100 million in drug trafficking assets? I think that’s a great ROI and would agree. Would it be worth laundering $10 million in order to arrest five guys and get back the $10 million? I’m not sure. Would it be worth laundering $10 million to make arrests that eventually prevent 100 murders in Mexico? I think that’s a good question to ask, but I’m not sure something so complex can be measured clearly.

Patrick Corcoran writes that the money laundering fight may never be enough to put a serious dent in the traffickers’ finances. That’s correct, but I’m not sure that seizing every dollar possible is the point of anti-money laundering efforts. The point is to gain intelligence on specific individuals (if you could launder $10 million and use the intel to track Chapo’s location, would it be worth it?) as well as make money laundering a risky crime that people avoid. Right now, money launderers do not believe that there is a serious chance they will be arrested, prosecuted and have their assets seized. If anti-money laundering efforts in Mexico have one specific goal, it should be to change that attitude and make money laundering a risk worth avoiding.

I can’t judge the DEA’s programs here because, as the NYT indicates, it’s not clear how they’re measuring the costs and benefits. They could be awesomely effective or a complete waste of time and taxpayer money. We need more numbers and we need to have the debate over what results are expected for each dollar laundered.

Reprinted with permission from James Bosworth at Bloggings by Boz. See original post here.

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