Mexican cartels launder 25.000M $ per year – press highlights association to BTC

[DdmrDdmr]

Some of the headings we can read these past few hours on the media, bear phrases such as (translated when in Spanish):

Mexican cartels are reportedly laundering 25.000M $ per year through bitcoin

https://www.lajornadamaya.mx/nacional/191517/reportan-que-carteles-mexicanos-lavan-con-bitcoins-unos-25-mil-mdd-al-ano

The UNO warns that Mexican cartels are laundering millions of dollars through cryptocurrencies

https://elpais.com/mexico/2022-03-10/la-onu-advierte-de-que-los-carteles-mexicanos-lavan-millones-de-dolares-a-traves-de-criptomonedas.html

“Mexican cartels turn to bitcoin, internet, e-commerce”

https://abcnews.go.com/International/wireStory/mexican-cartels-turn-bitcoin-internet-commerce-83367341

Mexican cartels use cryptocurrencies to launder money:UNO
 

https://www.forbes.com.mx/carteles-mexicanos-utilizan-de-criptomonedas-para-lavar-dinero-onu/

Drug cartels launder 25.000M $per year using bitcoin
 

https://www.publimetro.com.mx/noticias/2022/03/10/carteles-de-mexico-lavan-hasta-25-mil-millones-de-dolares-al-ano-y-hacen-uso-del-bitcoin/

The list goes on, but the above headlines are enough to highlight a fact that is bound to be partially right (crypto being used to launder money), but that is blown out of proportion by most if not all the media, or at least, they do not bother to try to set the proportion.

I managed to find the original report (see foot of this post), which I’ve taken a brief look at. Some of the important contextual quotes I find to be the following (see “Illicit financial flows and money- laundering mechanisms”):

<…> Mechanisms
used for money-laundering include the banking system,
cash couriers, bulk cash smuggling, money-service pro-
viders, alternative remittance systems (e.g. hawala), stores
of value, trade-based money-laundering, mobile or
Internet payments, cryptocurrencies, non-profit organiza-
tions, real estate and front companies.

Traditional banks continue to be favoured mechanisms for
laundering money. <…>
<…> Criminals use “straw men” to create entities, including real
estate companies, jewellery stores and consulting services,
as part of a money-laundering network that also involves
homemakers, students and bank employees <…>
<…> Casinos and real estate are used for money-laundering <…>

Cyberspace and cryptocurrencies are emerging as a
new frontier for organized criminal groups battling for
control of the vast criminal markets for drugs, arms, sex
and persons. <…>
To remain under the threshold for banking trans-
actions that raise red flags, which is $7,500, criminals
typically split their illicit cash into small amounts and
deposit them into various bank accounts, a technique
known as “smurfing”. They then use those accounts to
buy a series of small amounts of bitcoin online, obscuring
the origin of the money and allowing them to pay
associates elsewhere in the world <…>

I haven’t managed to see a laundering total per channel or method used, but cryptocurrencies are mentioned at the tail of the methods, in a context of emerging. Therefore, very likely, they represent a small (yet unquantified in the report) amount of the gross total.

Press needs to stop searching for headings and learn to contextualize properly. By the above quotes from the base report, they should really have highlighted the association to banks, and not to crypto ...

See:
https://www.incb.org/documents/Publications/AnnualReports/AR2021/Annual_Report/E_INCB_2021_1_eng.pdf

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[Upgrade00]

Press needs to stop searching for headings and learn to contextualize properly. By the above quotes from the base report, they should really have highlighted the association to banks, and not to crypto ...

A link between cartels and fiat will not really yield much traffic, cause people do not really care about what is done with fiat which is already accepted globally as the staple means of transacting, drug deals happen on the streets everyday with fiat, nothing new to see there. Crypto would make far more headlines and news media has been known to twist news headlines in order to create more controversy, and there's no shortage of controversy with Bitcoin.

The best approach is to debunk those news articles on social media and any other source it is published so more people are aware of the twosted facts.

[Slow death]

I was impressed how they know the value that is being laundered, bitcoin is something very volatile and needs some knowledge to avoid being stolen, not to mention that governments pressure exchanges, banks and so many companies to force their customers to do KYC then use bitcoin for money laundering is much riskier than using other methods, in my opinion because bitcoin is more flashy, fiat is something that has been used for years in the criminal world, but I could be wrong

[Charles-Tim]

The best approach is to debunk those news articles on social media and any other source it is published so more people are aware of the twisted facts.

I like Chainanalysis report, the reason is because Chainanalysis will give methodology used and also a practical examples about their claims, most other organizations or sites just spread information in a way that is misleading. We all know how even internet fraudsters can scam people with fiat and use it to buy bitcoin or any other cryptocurrency not to talk of a cartel that can have legit business to cover up fiat illegal activities.

[coolcoinz]

Criminals typically split their illicit cash into small amounts and
deposit them into various bank accounts, a technique
known as “smurfing”. They then use those accounts to
buy a series of small amounts of bitcoin online, obscuring
the origin of the money and allowing them to pay
associates elsewhere in the world <…>

This is the important part, as pointed by OP. The headline screams "bitcoin money laundering" and in reality they're using loopholes in the fiat system and traditional banking.
If they are able to create shell accounts that regularly transfer relatively large sumps of money split into <$7500 transactions it's the bank's job to identify them. Then from the list of possible shell accounts the bank should be able to separate accounts with regular transfers to bitcoin exchanges and then trace the money back to the source. It's the bank's fault that shell accounts exist and that they are allowing people to open accounts using fake credentials. Somebody has to keep coming to the bank to deposit cash, because that's how dealers get paid and this cash is then converted to balance and transferred to bitcoin exchanges. Here you have your weak point and this is where the real laundering is happening, not when they pay somebody with Bitcoin.

Suppliers pay mules in cash to smuggle drugs, then drugs are distributed by dealers who also get paid in cash and share profits with the cartel, the cartel deposits that cash in the bank, but all these deals and transfers are not important. Smearing bitcoin is.

Nobody in their right mind would choose Bitcoin to launder money where there's plenty of privacy coins that actually offer some degree of anonymity.
Also, if these people can create shell accounts and have resources to keep them below the bank's radar, they're all set to keep laundering without the need to use a public blockchain.

[yazher]

Crime is mostly facilitated by fiat currencies & always has been. Media just can’t wait for the opportunity to stick a knife into bitcoin & twist it sometimes. I wouldn’t even give this type of article any interest at all. It’s mostly click bait for boomers & FUD.

They've been doing it for a long time now since bitcoin become a trend years ago and whenever there's some anomaly regarding some people who used bitcoins as their prop, they highlighted the word bitcoin to make it seem it is the main culprit on the said anomaly. Nevertheless, if people still always trust what the mainstream media said, they will all lose the chance for better choices regarding their assets, and they will ignore the fact about what good things can do to the economy and secure their money from authorities who can hold their account.

[stompix]

I don't know how this scheme of buying bitcoins under a sum, like those 7.5k and then selling those coins can actually work as a real money-laundering mechanism, even if you do it in tiny batches to not attract attention you will still need thousands of accounts and one huge volume in bitcoin trading, and al of this leaving huge traces around.
Laundering money doesn't mean hiding the source, is about making those seem clean generated from a legit business source, and claiming you have mined coins in 2009 and you're now selling won't get you too far.

I can understand laundering money through crypto casinos, you can simply set up fake players, even have some fake ids for them, and make them lose all their bets, from a casino point of view it's a legit income. Same for BATM, I know this is indeed used, you simply have guys selling and buying coins at your own machine, he buys $1000 of crypto, the fee is $100 he gets $900, does that three times, then sells all those $2700 worth of coins for cash, paying again 10%, and do that all day.
The camera is bad and didn't get anything, there were no IDs required for under $1000, but the profit is legit. In this case, it really does work, because there is no other activity that could match it in speed and volume.

But working with banks? Especially after the bitfinex hacker fiasco when it comes to laundering money?  don't see it happening, not with 25 billion.

[wozzek23]

I believe there is still the possibility for them to be caught, we have seen so many illicit activities take place through cryptocurrency, but most of those who committed the crimes were caught at last. so I am believing that this wouldn’t be much of a difference.

But the problem we are going to have is the negative impact that this news is going to have in the market. It can even cause the price to start decreasing, because a lot of people would start spreading the news through social platforms like Twitter and using it as an excuse to talk bad about Bitcoin. One of the reasons that the government has been fighting against crypto these days is because of the belief that it is being used for illicit activities such as this, and also to fund terrorism. If there would be a way to curb such activities from taking place through Bitcoin, I believe it would be helpful.

[jostorres]

Crime is mostly facilitated by fiat currencies & always has been. Media just can’t wait for the opportunity to stick a knife into bitcoin & twist it sometimes. I wouldn’t even give this type of article any interest at all. It’s mostly click bait for boomers & FUD.

You are right about that, the media are always looking for negative news to pull down Bitcoin. We have seen so many news like this, such as the media saying that Bitcoin mining is bad for the environment. They say that cryptocurrency mining is bad for the environment, while there are so many other industries that are releasing bad gases which can be harmful to the environment, but no one talks about these other industries. Rather they choose to focus on Bitcoin mining, because of the level of hatred that they have for Bitcoin.

So, this is not really a surprise for me that the media will keep on spreading any negative news that they would find about Bitcoin.

[DeathAngel]

Crime is mostly facilitated by fiat currencies & always has been. Media just can’t wait for the opportunity to stick a knife into bitcoin & twist it sometimes. I wouldn’t even give this type of article any interest at all. It’s mostly click bait for boomers & FUD.

[henmark]

This could be seen as a bad thing. After all why would we want people like Mexican cartels to use crypto, right? But if you decide to find a way to block them from using crypto, then how long until we could block you from using as well? Either you are fully decentralized, or you are not at all.

This is why I believe that we should not be focusing our resources into finding a way for bad people to stop using crypto. ISIS uses crypto as well to launder their money, which is a terrible thing when you consider it but that is still a reality. Ignore the bad ways that cyrpto is used and just try to focus on the amazing great things that it helps get achieved like donations to Ukraine.

[slackovic]

This could be seen as a bad thing. After all why would we want people like Mexican cartels to use crypto, right? But if you decide to find a way to block them from using crypto, then how long until we could block you from using as well? Either you are fully decentralized, or you are not at all.

This is why I believe that we should not be focusing our resources into finding a way for bad people to stop using crypto. ISIS uses crypto as well to launder their money, which is a terrible thing when you consider it but that is still a reality. Ignore the bad ways that cyrpto is used and just try to focus on the amazing great things that it helps get achieved like donations to Ukraine.

Almost every good thing that mankind has invented can be used both in a good way and in a bad way. But that doesn't mean that it is a bad thing in general. For example, electricity can be used to electrocute people but that doesn't mean that electricity is a bad thing. Likewise, of course Bitcoin can be used to do bad things, but it can be used for good things.

[avikz]

That's called clickbait article. It's not a news that Mexican cartels are laundering money but when it is associated with cryptocurrency, it becomes a news! That's what media is doing nowadays because of the steep competition.

And see, they are successful as well because we are at the core crypto community is clicking and discussing this! It's all marketing strategy to be honest! But what is unethical is that it is spreading bad reputation for bitcoin or cryptos in general.

[DdmrDdmr]

That's called clickbait article <…>

It’s likely partly that, but in some of the cases I’d venture to state that it’s mere incompetence. The need to spew out articles frequently may have something to do with it, but when the article itself states that 25.000M $ per year are laundered through bitcoin by the Mexican cartels (as do at least two of those listed in the OP, and others I’ve seen), they’re denoting not having researched the source as they should:

Information source:

Mexican cartels are believed to launder an estimated $25 billion a year in Mexico alone.

https://www.incb.org/documents/Publications/AnnualReports/AR2021/Annual_Report/E_INCB_2021_1_eng.pdf

The above, is the overall estimated figure for Mexico, but it is certainly not attributed to bitcoin alone by far. Journalists / wannabe journalist should pay better attention to details …