Mexico's new plan to crack down on drug money: you can keep some

A new initiative offers those who tip off Mexican investigators to money launderers up to one-quarter of the value of whatever is seized.

By , Staff writer

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    Members of the Mexican army guard $26.2 million seized from a house in northwestern Sinaloa state in the second largest cash haul in the country's history, in 2008.

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Catch a criminal, keep his wallet.

In short, that's Mexico's newest plan to crack down on the annual flow of billions of dollars into the hands of drug gangs.

The attorney general's office announced the new initiative against money laundering this week, the latest in a series of government efforts to curtail the flow of money that finances drug gangs. Mexicans who tip off investigators to money launderers will receive up to one-quarter of the illegal funds seized.

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But not everyone is enthusiastic about the new initiative, with some analysts cautioning that it shifts the burden of intelligence-gathering to the individual and is a risky gamble in a battle where revenge seems to know no limits.

“You have to take your chances,” says Enrique Cárdenas Sánchez, executive director of the Centro de Estudios Espinosa Yglesias, a public policy think tank in Mexico City that analyzes government laws. He supports the program but has reservations. “The risk involved is very high.”

And what if the new program unwittingly leads to more unsavory behavior? Drug gangs might use the program to undermine commercial rivals, for example, or it might give rise to insurance fraud-type schemes.

“I do not know to what extent it will provoke other sorts of behavior … or entail vendettas,” says Mr. Cárdenas.

Unrealistic risk for citizens?

Under the new reward plan, those who report crimes of suspected money laundering – by phone, e-mail, or face-to-face – could receive up to 25 percent of the value of whatever is seized, be it money or land or goods. The exact amount would be determined by a special committee.

Some say that it, like the money laundering law, places citizens in charge of functions that the police or prosecutors should be carrying out.

“This moves the burden to the individual,” says Arturo Pueblita Fernandez, a professor of law at the Iberamerican University in Mexico City. “It is not a frontal attack on money launderers.”

Some politicians have criticized the reward plan as too high-stakes. Legislator Raymundo Saldaña Ramírez told the local press in the increasingly violent state of Veracruz that the plan puts citizens at risk.

“We cannot as citizens denounce [money launderers] and expose our families,” he said.

An unwillingness to reach out to police and other authorities – as citizens fear they are either incompetent or corrupt – is a long-standing problem in Mexico, where the impunity rate is estimated at 98 percent. Only a quarter of Mexicans are believed to report crime in the first place – though that number might inch up if a cash reward is involved.

Calderón targets illicit funds

All agree that something must be done. Every year between $19 billion and $29 billion flow from the US to Mexico to fuel drug trafficking organizations, according to a recent US-Mexico investigation (pdf). Gangs then use the money to purchase arms, bribe politicians, buy off entire police forces, and intimidate anyone else who might stand in their way.

Some have criticized Mexican President Felipe Calderón for sending thousands of troops and federal police out to the streets to combat organized crime without simultaneously targeting the gangs' cash supplies.

But Cárdenas says the new program, along with several other proposals, has set the government looking in the right direction. Last June, Mexico began limiting anyone without Mexican bank accounts to exchanging a maximum of $1,500 in US dollars per month. President Calderón also proposed a law in August that includes a ban on any cash purchases exceeding $7,700. That proposal also requires businesses such as jewelers to report their largest sales.

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