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North Texas Banks, Drug Cartels, and Money Laundering in Dallas

When a business is involved in illegal activity, operating on a cash basis is smart. It’s not easy for law enforcement to track dollars like it is for them to access and monitor checking accounts or online business transactions.

Maybe you’ve heard the stories of Pablo Escobar having so much cash in hand that his bookkeepers alloted an annual 10% revenue loss for cash that was eaten by rats or lost in water damage. (For more on that story, check out the 2009 autobiography of Escobar’s brother and accountant Roberto Escobar, The Accountant’s Story: Inside the Violent World of the Medellín Cartel.)

Paying in cash is preferred by many of their customers, too. A suburban soccer mom here in Dallas, for instance, may not want to have her heroin buys showing up on her MasterCard.

Which means lots and lots of cash moves through our economy via illegal industries, and there comes a time when the business operators need to convert that cash into other assets. That’s money laundering at its core: changing cash into something else.

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Banks and Money Laundering: Like Peanut Butter and Jelly

Banks are big with money laundering; they are all about money, of course. Deposit cash into a checking account, and suddenly you’ve converted your dollars into something else. Now, you can pay with check or debit card. Voila, money laundered.

Not that federal agencies like the FBI and the Department of Treasury don’t understand this. That’s the reason there are all these structuring laws on the books, they argue. Structuring laws that do things like monitor cash deposits and require banks to report when someone deposits cash over a certain amount.

For details on how structuring laws work, read my article, “Structured Cash Deposits: What Do I Do When The IRS CID Agent Comes?

Here in Dallas and North Texas, we’ve got lots of very successful operations being run by Mexican drug cartels. A tremendous amount of cash moves through the Dallas economy (and surrounding areas) because of cartel businesses like heroin, cocaine, meth, and other drug crime activities, among others. Which means that there’s money laundering going on here, each and every day.

And there are local, state, and federal investigations working to find and stop these criminal activities on the streets as well as through their finances. The pressure is being felt here, but it’s being felt even more down on the U.S. – Mexico border.

1. Banks Along the Mexico Border Are Closing Branches Because of Money Laundering Issues

This summer, big banks like Bank of America, Chase, Wells Fargo, and Citigroup started closing down their branches in U.S. – Mexico border towns. These big banks provide an opportunity to hide money laundering as it moves through accounts in ways that smaller banks cannot.

But when they’re caught, the fines are big. Back in 2012, for example, Great Britain’s HSBC was hit with $1.9 Billion in federal fines for dirty money moving through its bank. This summer, the very same bank was fined another $43 Million for cleaning up dirty money out of its Swiss offices.

It’s understandable that the big banks are getting more and more skittish about doing business down near the border to the very homeland for the major drug cartels.

So, we can expect less banking business down in the Texas – Mexico border towns. This, even though no one is pointing out how this hurts the local businesses there. (Read, for instance, how El Paso business is hurting as a result in this El Paso Times article.)

Here’s the question: will we be seeing more money being laundered here in Dallas and North Texas where the big banks are happily operating today?

2. Bankers Are Getting Investigated and Arrested by the Federal Agencies for Money Laundering

There’s another reason for banks to be more and more concerned about money laundering investigations by law enforcement. The authorities are coming after bankers and bank employees now, and not just the financial institutions themselves. All in the efforts to find and stop money laundering by the Mexican Drug Cartels.

Consider the arrest made a few months ago of a former bank president of Plains State Bank in Kansas who was busted on 29 counts of money laundering and one count of failing to file a suspicious activity report. One of his loan officers as well as the bank’s cashier were also charged with failing to file a suspicious activity report.

And the money laundering here? It’s allegedly Mexican drug cartel cash moving through this Kansas bank and the Bank of America branch over in El Paso.

For more on how bankers are becoming federal targets, read our earlier post, “Bank Executives Alert: Feds Focusing Upon Bankers In Money Laundering And Tax Fraud Investigations Involving Overseas Bank Accounts – And U.S. Bankers May Be Facing Federal Indictments.”

The Future of Money Laundering in North Texas

Just as the heroin market has grown into the suburbs of Dallas and Plano and the rest of North Texas, the drug cartels are making more money here. And money laundering for Mexican drug cartels has to happen somewhere.

If the banks are closing branches down on the border, the issue becomes how to get the cash to banks — it’s not that the cartel businessmen are going to stop using established methods of using banking to launder their cash.

And it’s not new to Dallas, either. Consider the recent sentencing of Bambi Adams, a Texas soccer mom whose husband was a meth distributor here in the Dallas area for the Sinaloa Cartel.

She was sentenced back in August to 9 years for taking part in a money laundering operation that involved Bambi (and others) depositing cash in a variety of Texas bank accounts, laundering cash revenue from the cartel’s meth market.

So, bottom line?   We’re going to see lots of money laundering here in North Texas, and a corresponding increase in arrests being made that include federal money laundering charges.   

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For more information, see our web resources on money laundering as well as Michael Lowe’s Case Results, including this case result, “Federal Structuring Case: Lowest Possible Guideline Sentence up to 58% Reduction.”

 


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