Update on U.S. Currency Restrictions in Mexico: Funnel Accounts and TBML

FIN-2014-A005 May 28, 2014
Update on U.S. Currency Restrictions in Mexico: Funnel Accounts and TBML

1. See, FinCEN (June, 2010) Advisory FIN-2010-A007: “Newly Released Mexican Regulations Imposing Restrictions on
   Mexican Banks for Transactions in U.S. Currency.”
2. See, FinCEN (April, 2011) Advisory FIN-2011-A009: “Information on Narcotics and Bulk Currency Corridors” and
   (July, 2012) Advisory FIN-2012-A006: “Update on U.S. Currency Restrictions in Mexico.” Restrictions on USD cash transactions in Mexico may have led criminal actors to use additional schemes, such as using “funnel accounts” in conjunction with trade-based money laundering, to launder illicit proceeds. The Financial Crimes Enforcement Network (FinCEN) is issuing this update to advise financial institutions on the increased use of funnel accounts as part of trade-based money laundering conducted by criminal actors following the restrictions on U.S. currency transactions in Mexico. This Advisory provides “red flags” that may assist financial institutions identify and report suspicious funnel account activity. Funnel Account: An individual or business account in one geographic area that receives multiple cash deposits, often in amounts below the cash reporting threshold, and from which the funds are withdrawn in a different geographic area with little time elapsing between the deposits and withdrawals. Background In June 2010, the Mexican government announced regulations limiting deposits of U.S. cash in Mexican banks.1 Several months later, the Mexican government expanded the restrictions to include cash deposits made at exchange houses (casas de cambio) and brokerages (casas de bolsa). In 2011 and 2012, FinCEN issued two advisories that detailed the rise of funnel account use (also known as interstate or out-of-state funnel account activity) as a technique employed by individuals seeking to move illicit proceeds following the currency restrictions.2 Law enforcement information and Suspicious Activity Reports (SARs) now show that Mexico￾related criminal organizations: (i) continue to employ funnel accounts to move illicit proceeds and (ii) are using funnel accounts to finance the purchase of goods as part of Trade￾Based Money Laundering (TBML) activity. In some instances, multiple funnel accounts have been observed to transfer funds into a single consolidated account from where the funds are subsequently withdrawn. Criminal organizations use wires and checks issued