FinCEN Advisory - Issue 9: Colombian Black Market Peso Exchange

FinCEN Advisory
United States Department of the Treasury Financial Crimes Enforcement Network Subject:
Colombian
Black Market
Peso Exchange
Date:
November
Advisory:
Issue 9
This advisory is provided to alert banks and other depository institutions to a large-scale, complex money laundering system being used extensively by Colombian drug cartels to launder the proceeds of narcotics sales. This system is affecting both U.S. financial depository institutions and many U.S. businesses. The information contained in this advisory is intended to help explain how this money laundering system works so that U.S. financial institutions and businesses can take steps to help law enforcement counter it. Overview Drug sales in the United States are estimated by the Office of National Drug Control Policy to generate $57.3 billion annually, and most of these transactions are in cash. Through concerted efforts by the Congress and the Executive branch, laws and regulatory actions have made the movement of this cash a significant problem for the drug cartels. America’s banks have effective systems to report large cash transactions and report suspicious or unusual activity to appropriate authorities. As a result of these successes, the placement of large amounts of cash into U.S. financial institutions has created vulnerabilities for the drug organizations and cartels. Efforts to avoid report￾ing requirements by structuring transactions at levels well below the $10,000 limit or camouflage the proceeds in otherwise legitimate activity are continu￾ing. Drug cartels are also being forced to devise creative ways to smuggle the cash out of the country. This advisory discusses a primary money laundering system used by Colombian drug cartels. The system involves the use of a Colombian Black Market Peso Exchange as a mechanism to place substantial amounts of currency from U.S. narcotics sales into U.S. financial institutions to avoid detection by the Bank Secrecy Act reporting requirements. In simple terms, the Colombian cartels sell drug-related, U.S.-based currency to black market peso exchangers in Colombia who, in turn, place the currency into U.S. bank accounts. The exchangers then sell monetary instruments drawn on their bank accounts to Colombian importers who use them to purchase foreign goods.