convergence

Deville
function, but also leads us to a better understanding of how protection of these illicit supply
chains undermines government efforts to contain them, as well as the larger detrimental effect
illicit networks have on the state.
The supply chains of global criminal networks are bidirectional; that is, one chain conveys
contraband from supplier to demander while a reverse chain conveys payment from
demander to supplier. In the case of Mexico, narcotics smuggling—which fuels corruption,
weapons trafficking, kidnappings, and violent crime—has risen to disturbing levels over the
past few years. Mexican cartels ship indigenous drugs (marijuana, methamphetamine, and
others) and, as described above, imported drugs (principally Colombian cocaine) into the
United States. According to the 2009 National Drug Intelligence Center (NDIC) National
Drug Threat Assessment, bulk cash is the primary method used by Mexican drug-trafficking
organizations to transport their proceeds from the U.S. market back to Latin America. The
U.S. Department of Homeland Security estimates between $18 billion and $29 billion in
cash is smuggled from the United States to Mexico annually, nearly all from drug sales. 12 The
primary recipients of illicit U.S.-generated gross drug revenue are the nodes along the supply
chains of Mexican illicit networks. These proceeds are essential to sustain their operations,
purchase additional drugs and supplies, and protect their activities in other ways including
bribes to government and law enforcement officials. 13 Without these proceeds, illicit networks
would be forced to identify alternative methods to fund their operations, greatly reducing their
power. The movement of bulk cash across the border is arguably the most important part of
the Mexican illicit network supply chain.
Cash makes up the majority of drug revenue for obvious reasons; it is convenient and
virtually untraceable. Cash is the preferred method of payment for the product on the street
for the same reasons. To a large extent, cash facilitates an illicit network’s operations, making
it more difficult for governments to detect and track the flow of illicit funds. Reliance on cash
allows illicit networks to function in a shadow economy, operating in an unregulated sphere
outside the global marketplace. In 2010, the Mexican government took steps to combat illicit
networks’ use of cash to fund operations by introducing new regulations that limited the
amount of U.S. currency allowed to be deposited into Mexican financial institutions. However,
it is too early to determine whether such regulations will have a significant impact on
drug-trafficking operations. Prepaid access cards have emerged as a potential alternative to
both transporting and laundering money, and a 2010 report by the Department of Homeland
Security noted that these cards might offer more advantages than cash due to their small size
and lack of reporting requirements. As of this writing, however, neither Mexican nor U.S. law
enforcement agents have observed wide use of prepaid cards by Mexican illicit networks. 14
Moving such large amounts of bulk cash poses a complex logistical challenge for illicit
networks. To transport this cash, network managers compartmentalize the activities, assigning
discrete management responsibilities to different cells within the supply chain. Each cell has
a fixed role or function it must perform that is integral to the overall success of the network.
Roles include consolidating and counting proceeds at centralized counting houses, packing cash
into vehicles, moving cash across the border, providing intelligence related to law enforcement
whereabouts, and so forth. 15
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