On 28 April, FinCEN issued guidance to financial institutions on the repatriation of drug profits in US currency smuggled out of the United States. Now the OCC has stated, in a Bulletin issued today, that there is a dramatic increase in the smuggling from the US into Mexico of bulk cash proceeds derived from the sale of narcotics and other criminal activities. World-Check has previously detailed the situation for our readers. See Watch for those drug greenbacks coming back into the US, World-Check, 29 June, 2006.

The OCC pointed out the problem:

• large amounts of US currency (drug profits) are in Mexico, as the result of bulk cash smuggling.

• Numerous layered transactions may be employed by laundrymen to disguise its criminal origins.

• After layering, it may be returned directly to the US, or further transshipped to or through other jurisdictions.

United States regulators wish to ensure that US financial institutions are not used as a conduit for the laundering of proceeds from narcotics trafficking. However, it expressly stated that the issuance of this Advisory does not mean that US financial institutions should curtail business with legitimate currency exchanges, or other money service businesses in Mexico. This is in line with Treasury policy discouraging financial institutions from dropping MSBs as customers, due to perceived high-risk.

The fact that the OCC issued this Bulletin does mean that it is quite concerned about the situation,and compliance officers at financial institutions that do business with Mexican MSBs should govern themselves accordingly.

Related topic: Mexican Cartels employed diverse businesses for laundering, World-Check, 15 July, 2006.