convergence

The Illicit Supply Chain
For cash consolidation and the U.S. transport phase of the supply chain, network members
take the drug proceeds to a regional centralized counting house. These houses are generally
located in major U.S. cities such as Atlanta, Chicago, Boston, and Los Angeles. 16 In October
2011, Federal agents seized $200,000 in cash from a network of stash houses in Phoenix operated
by members of the Sinaloa Cartel. 17 During this phase, in addition to money counting,
members typically convert smaller bills to $100 or $50 notes to reduce the bulk of the cash. 18
The money remains in the counting house until it is ready to be transported across the border.
The next part of the supply chain is the preparation of the cash for transport into Mexico.
After being converted to larger bills, the cash is vacuum-sealed into plastic bags and concealed
in vehicles. 19 Illicit networks typically conceal cash in the wheel walls, panels, and spare tire
compartments. Sometimes cash is hidden in tractor-trailer trucks, which are also used to
transport drugs into the United States from Mexico. 20 In March 2011, during a routine traffic
stop, Indianapolis police seized $500,000 from the hidden compartment of a truck’s ceiling.
The cash was bound for a truck stop in McAllen, Texas. 21 Drivers typically deliver the cash to
a safe house along the border (as was the case in March 2011) or drive directly into Mexico.
The next node in the illicit cash supply chain is transporting proceeds across the border
from the United States back to Mexico. To guard against seizure by Federal agents, network
members frequently rotate cash transport vehicles. They also only ship a portion of their proceeds
in any vehicle. Most vehicles will only carry between $150,000 and $500,000. Therefore,
if a vehicle is stopped and cash is seized, the loss is not sufficient to render the overall operation
unprofitable. 22 The network typically has a group of rotating drivers responsible for driving
the cash to a designated border town close to the drug-trafficking center of its organization. 23
Times and locations of border crossings are chosen based on intelligence provided by lookouts
(called halcones, or hawks). These halcones are responsible for carefully watching border traffic
to spot any unusual patterns or searches. If they observe anything unusual, they will reroute
the vehicles to another crossing. 24 The illicit networks hold the advantage in this step of the
chain since U.S. law enforcement has primarily focused on stopping the northward flow of
contraband. According to U.S. and Mexican officials, although 10 percent of southbound
vehicles are supposed to be stopped for a secondary screening, the actual number is far less. 25
In a March 2011 report, the Government Accountability Office noted that the U.S. Customs
and Border Protection (CBP) seized $67 million in illicit bulk cash at the border over the past
2 years. 26 Since NDIC estimates between $18 and $29 billion in cash is smuggled out of the
country each year, the amount seized by U.S. officials is quite low at less than 1 percent. According
to the same report, CBP efforts are limited by lack of staffing, effective infrastructure,
and technology. 27 As one U.S. official in El Paso admitted, “We are simply not configured to
deal effectively with southbound traffic.” 28
After the cash has been moved into Mexico, the final link in the supply chain is to break
it down into smaller quantities to meet payroll, pay bribes, and compensate Colombian
suppliers. This is estimated to take about half of the cash. The remainder is then integrated
into the financial system using a variety of tactics. Often, the bulk cash is deposited into the
Mexican banking system through centros cambiarios (currency exchange businesses), banks,
retail stores, casinos, real estate purchases, and a variety of other money-laundering techniques.
When needed, funds are repatriated back to the U.S. banking system through correspondent
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