A Guide to Anti-Money Laundering for Crypto Firms

Top Money Launderer for Mexican Cartel Sentenced to More Than 15 Years in Prison

Financial Crime Latest News

A former attorney who laundered drug money for the Sinaloa Cartel has been sentenced in San Diego federal court to more than 15 years in prison. The sentencing follows the defendant’s arrest by Mexican authorities while traveling in the state of Oaxaca in March 2016.

According to the Department of Justice, defendant Juan Manuel Alvarez-Inzunza arranged the collection of millions of dollars in drug proceeds in cities across the United States between 2013 and 2015. The defendant then worked with associates in Colombia to transfer the funds to Mexico, Central America, and other locations.

The Sinaloa Cartel

According to court records, agents with Homeland Security Investigations found the defendant regularly received drug proceeds transfer requests from the cartel’s top leadership. On receiving these requests, the defendant relayed the orders to an associate in Columbia who coordinated lower-level couriers in the US to pick up large amounts of cash.

Beginning in 2013, federal agents intercepted multiple communications between Alvarez-Inzunza and other high-level Sinaloa Cartel members as they discussed the transfer of drug proceeds from the US to Central America. Using information from the wire intercepts, the agents seized over $4 million in drug proceeds before they crossed the US border.

Alvarez-Inzunza’s sentencing follows the life sentence received by Sinaloa Cartel Leader Joaquin “El Chapo” Guzman in July 2019. 

High-Intensity Drug Trafficking Area Program

The High-Intensity Drug Trafficking Area (HIDTA) program was established by the US Congress following the Anti-Drug Abuse Act of 1988 to enhance the national fight against drug crime. The program is run by the Office of National Drug Control Policy (ONDCP) and serves to aid and provide funding to “federal, state, local, and tribal law enforcement agencies operating in areas determined to be critical drug trafficking regions of the US.” The program currently designates 33 HIDTAs across all 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. 

The US southwest border with Mexico is one of the program’s designations. The HIDTA program in this area focuses on a range of drug prevention activities, including specialized drug courts and children’s educational initiatives.

Drug Related Money Laundering Red Flags

The Financial Action Task Force’s (FATF) international standards to fight money laundering and the financing of terrorism and proliferation provide a comprehensive framework of measures that firms should implement to mitigate financial crime risks. However, the red flags related to each money laundering typology can differ depending on customer type and industry. For drug-related money laundering, firms should be aware of the following red flags and calibrate their anti-money laundering (AML) solutions accordingly. 

  • Changes in behavior: Customers that are or become involved in drug-related crime may display erratic financial behavior and have inconsistent sources of income
    Transaction patterns: Customers from HIDTAs may engage in unusual transaction patterns, including high volumes or frequencies of transactions, or transactions involving another party located in a HIDTA 
  • Adverse media: Customers that are the subject of negative media stories that connect them to drug crimes often pose a greater AML risk
    Money mules: Money launderers from HIDTAs may attempt to avoid AML measures by using money mules to conduct transactions on their behalf
  • Structuring: Money launderers operating from HIDTAs may attempt to introduce illicit funds into the financial system by depositing small amounts just below AML reporting thresholds 

Next steps

Following FATF guidance and local legislation, compliance teams should ensure that their AML programs implement a risk-based approach that reflects their threat landscape and regulatory environment, effectively highlighting any red flags pertaining to drug-related money laundering. 

This should include sanctions, PEPs, and adverse media screening in addition to suitable customer due diligence processes and transaction monitoring measures. 

Originally published October 14, 2022, updated October 14, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).