U.S. faces tough fight in cash smuggling crackdown
Sunday, February 12, 2012
WASHINGTON -- Jeanette Barraza-Galindo conspicuously left her bags of teddy bears and throw pillows on a bus during an inspection at the Texas-Mexico border -- and professed ignorance about the $277,556 officers found hidden inside. The bags were handed to her at a bus station, gifts to be given to a child upon her return to Mexico, she told investigators.
The crime she pleaded guilty to -- bulk cash smuggling -- is increasingly drawing the attention and resources of federal authorities responsible for fighting drug trafficking across the border. Federal immigration agents say their investigations have yielded more cash seizures and arrests in the past half-dozen years as criminals, sidestepping scrutiny from banks over electronic transfers, resort to using cash to conceal proceeds from drug trafficking as they move the money south to crime rings in Mexico and elsewhere.
It's similar to the tactic taken in fighting terrorism: crippling financing networks before the money ends up with leaders of drug cartels and trafficking rings. But the flow is hard to stop.
Officials in the U.S. and Mexico are realizing that criminal enterprises, just like other businesses, can't operate without a steady cash stream, said David Shirk, director of the Trans-Border Institute at the University of San Diego, which promotes scholarship of border issues.
"We're shifting our strategy to a more diverse strategy of not just going after bad guys and arresting them, but also going after their guns, going after their money," he said.
It's illegal to try to smuggle more than $10,000 in undeclared cash across the border. Officials say the crime itself is often connected with other illegal activities including drug trafficking, gambling and credit card and customs fraud. Money that's seized is deposited into government forfeiture funds, which can be used for further law enforcement efforts.
The Obama administration has identified targeting bulk cash smuggling as a prong of its strategy against transnational crime. Congressional panels held hearings on the issue last year. U.S. Immigration and Customs Enforcement reported more than $150 million in seized cash and 428 arrests in bulk cash smuggling investigations in fiscal year 2011, up from $7.3 million and 48 in fiscal year 2005. A cash smuggling center in Vermont that's run by ICE's homeland security investigations and that opened in 2009 has expanded operations in a sign of heightened emphasis, officials announced in December.
But experts say measuring the impact of the beefed-up focus is tricky.
It's hard to track cash's origin and destination -- and investigators can't always count on help from couriers, who may be more afraid of cooperating than spending a few years in prison.
Plus, the amount seized represents a fraction of the total money at stake. Estimates cited by federal authorities suggest at least $18 billion in illicit proceeds is smuggled across the southwestern border each year. A 2010 report by the Government Accountability Office said staffing and infrastructure at the border were limiting success in detecting large quantities of cash, and also highlighted another problem: the use of prepaid, stored value cards -- which may be used to access cash at ATMs and aren't as stringently regulated as traditional banking.
"I call this winning the battle, losing the war. Sure, $90 million sounds like a lot," said Bruce Bagley, a University of Miami international studies professor who researches drug trafficking. "That's nothing in comparison to the $19 to $39 billion that's being returned" into the Mexican economy.
Cash smuggling, a seemingly elementary form of money laundering, has emerged as a seductive medium for criminals as banks have become more sophisticated in spotting suspicious transactions. Cash has built-in advantages, too: It can be transferred without a trace and is instantly available.
"The financial industry has done a much better job in terms of trying to keep out illicit money, and as a result the organizations adapt and then they go to some tried-and-true methods -- and, that is, they're bulking it up and sending it where it needs to go," said Joseph Burke, chief of ICE's National Bulk Cash Smuggling Center in Vermont.
Criminal organizations generally move contraband north across the border. The money they make, in turn, flows south.
Burke said the money is often collected at consolidation hubs -- perhaps a home in a quiet residential neighborhood or a warehouse -- and then distributed among several couriers. Dividing the cash into smaller chunks means less money will be lost if one courier is arrested. Drug trafficking groups recruit relatives, associates and those lower in the organization -- like those who might need to pay off debt to the cartel. Sometimes, a percentage of the money being transported is dangled as an incentive.
Couriers have assorted methods for moving the money, including strapping it to their body, hiding it in car compartments, stacking it on pallets and concealing it in vacuum-packed bags.
Customs and Border Protection has increased the size of the border patrol and began screening more vehicle traffic and southbound rail traffic for weapons and cash after the Obama administration announced a new southwestern border initiative in March 2009, agency officials said at congressional hearings last year.
Still, the accountability office report said CBP needs better data on how successful its efforts have been as well as more consistent, full-time enforcement. It said its investigators tested three border ports of entry, with shredded cash hidden in the car. At two sites, the report said, the cars were allowed to turn around without further questioning, and the vehicle wasn't physically inspected at the third.
Perez said border patrol officers are vigilant about looking for suspicious behavior, but it's impossible to catch every single person.
"We know we're can't talk to 100 percent" (of drivers). It's like looking for a needle in a haystack, but we put a lot of resources out there," said Efrain Perez, a program manager with CBP.
Authorities can point to some successful, large-scale investigations, including one -- Operation Pacific Ring -- that ICE credits with disrupting a powerful cocaine smuggling business. Authorities in 2009 intercepted $41 million in shrink-wrapped cash concealed within fertilizer shipments at Mexican and Colombian seaports, and identified the cartel's smuggling routes, officials say.
Meanwhile, activity continues steadily -- mostly, but not always, along the southwestern border.
The cases this month include a U.S. citizen from Mexico who was caught in California with $277,770 in cash, wrapped in bundles and concealed in the rear panels of the car, and the discovery of $572,045 in freezers in a rental van driven by a man with a history of marijuana trafficking, according to a law enforcement bulletin obtained by The Associated Press.
Barraza, the woman stopped with the teddy bears and throw pillows last March, caught the attention of border patrol officers after she ignored instructions for passengers to remove belongings from the bus. She pleaded guilty to illegally concealing the money, though charging documents don't explicitly state the reason for the concealed cash. She was ultimately sentenced to two years in prison. Her lawyer didn't return messages.
Perez said the evolving methods of some couriers indicate progress in the fight.
"The smugglers, the drug traffickers, know we're out there, and they adapt. And so do we."