new limits on dollar transactions

[Doyle Phillips]

Mexico sets limits on dollar transactions
By Tracy Wilkinson
LOS ANGELES TIMES
06/16/2010

CULIACAN, Mexico ? In a step aimed at thwarting money-laundering by drug cartels, the Mexican government announced Tuesday strict limits on the deposit and exchange of U.S. dollars in banks, noting that the nation's economy is being flooded with illicit drug profits.

The money helps traffickers buy military-grade weapons used to kill tens of thousands of people and recruit small armies all over the country who battle rival gangs and government forces. Failure to intercept the money has long been singled out as a major flaw in President Felipe Calder?n's military-led offensive against cartels.

In response, the government announced it will limit individual bank-account holders to deposits of $4,000 monthly, while others without accounts will be allowed to exchange up to $1,500. Companies working along the border or in designated tourist areas can conduct bank transactions of up to $7,000 monthly.

Drug traffickers have long taken advantage of lax rules and the preponderance of cash transactions in Mexico to launder multibillion-dollar annual profits in Mexican banks and currency exchange houses. It is routine to see all-cash purchases of high-end items, from real estate to airplanes, horse farms and expensive art.

The new measures were announced in Mexico City by Finance Minister Ernesto Cordero, who said they were designed to reduce laundering by "closing the path to illicit resources" funneled into Mexican banks. He said that about $10 billion in surplus ? and probably illicit ? money had been detected annually in the Mexican banking system.

"For the last few years we've seen the Mexican banking system receiving a very large amount of U.S. dollars in cash, far beyond what could be explained by the activities and dynamics of the economy in Mexico," he said.

A recent U.S.-Mexican government report estimated that traffickers send between $19 billion and $29 billion a year from the U.S. to Mexico, slightly under half of which goes through banks. The rest stays in the cash economy; about 75 percent of all transactions in Mexico are in cash, and the measures announced Tuesday do not address this flow of money.

Guillermo Ibarra, an economist at the Autonomous University of Sinaloa, has estimated that 20 percent or more of the economy in Sinaloa, the state that is the historic cradle of Mexican drug-tafficking, is based on trafficking profits.

The measures do not apply to electronic transfers and are not likely to have an effect on average Mexicans, Cordero said, because the monthly limit on dollar transactions is far above the earnings of 98 percent of Mexican households.

Additionally, the Association of Mexican Banks said in a separate news conference that the new rules were not expected to affect the millions of dollars in remittances sent to Mexicans in Mexico from relatives working in the U.S. Almost all of those are transferred electronically and paid out in pesos, the organization said.

[meroberts]

Thank you Doyle. Very useful information.

Martha
---------------------------------------------------------------------

Mexico sets limits on dollar transactions
By Tracy Wilkinson
LOS ANGELES TIMES
06/16/2010

CULIACAN, Mexico ? In a step aimed at thwarting money-laundering by drug cartels, the Mexican government announced Tuesday strict limits on the deposit and exchange of U.S. dollars in banks, noting that the nation's economy is being flooded with illicit drug profits.

The money helps traffickers buy military-grade weapons used to kill tens of thousands of people and recruit small armies all over the country who battle rival gangs and government forces. Failure to intercept the money has long been singled out as a major flaw in President Felipe Calder?n's military-led offensive against cartels.

In response, the government announced it will limit individual bank-account holders to deposits of $4,000 monthly, while others without accounts will be allowed to exchange up to $1,500. Companies working along the border or in designated tourist areas can conduct bank transactions of up to $7,000 monthly.

Drug traffickers have long taken advantage of lax rules and the preponderance of cash transactions in Mexico to launder multibillion-dollar annual profits in Mexican banks and currency exchange houses. It is routine to see all-cash purchases of high-end items, from real estate to airplanes, horse farms and expensive art.

The new measures were announced in Mexico City by Finance Minister Ernesto Cordero, who said they were designed to reduce laundering by "closing the path to illicit resources" funneled into Mexican banks. He said that about $10 billion in surplus ? and probably illicit ? money had been detected annually in the Mexican banking system.

"For the last few years we've seen the Mexican banking system receiving a very large amount of U.S. dollars in cash, far beyond what could be explained by the activities and dynamics of the economy in Mexico," he said.

A recent U.S.-Mexican government report estimated that traffickers send between $19 billion and $29 billion a year from the U.S. to Mexico, slightly under half of which goes through banks. The rest stays in the cash economy; about 75 percent of all transactions in Mexico are in cash, and the measures announced Tuesday do not address this flow of money.

Guillermo Ibarra, an economist at the Autonomous University of Sinaloa, has estimated that 20 percent or more of the economy in Sinaloa, the state that is the historic cradle of Mexican drug-tafficking, is based on trafficking profits.

The measures do not apply to electronic transfers and are not likely to have an effect on average Mexicans, Cordero said, because the monthly limit on dollar transactions is far above the earnings of 98 percent of Mexican households.

Additionally, the Association of Mexican Banks said in a separate news conference that the new rules were not expected to affect the millions of dollars in remittances sent to Mexicans in Mexico from relatives working in the U.S. Almost all of those are transferred electronically and paid out in pesos, the organization said.

[laconstance]

Last fall, I discovered that the regular banks no longer change U.S. Dollars in Guanajuato. Only Banamex, and you are limited to $400 U.S. per day. It was pretty inconvenient for me, because I had brought U.S. dollars for a medical procedure (having been told it needed to be paid for in dollars), but it turned out that I needed to pay in pesos. I was running all around trying to get rid of my wad of U.S. dollars, in advance of the procedure, lest I be incarcerated at the hospital!