Major US Banks Closing Border Branches to Fight Money Laundering

Female putting money into washing machine, closeup
Photo: AP Stock Image

As more money continues to flow into the pockets of Mexican drug cartels, traffickers need to maintain a solid network of places—often along the southwest border—where they can launder drug money. However, in an attempt to stymie these efforts, several major US banks have been closing numerous branches in the region and shutting down hundreds of customer accounts.

According to a Wall Street Journal report, the Arizona border town of Nogales, population 21,000, is feeling the financial pinch most strongly. In the past several months, J.P. Morgan, Bank of America Corp. and Citigroup Inc.-owned Banamex USA have shut a total of four branches in Nogales, almost halving the number in town owned by big US banks, per the Journal. Separately, hundreds of Chase and Wells Fargo & Co. customers, some of them second- and third-generation business owners, have had their bank accounts closed.

Drug cartels and other criminal and terrorist groups have begun shying away from laundering money through larger banks and are relying more on money service businesses like Western Union. However, large banks offer opportunities for money launderers—namely their size and the ease with which they can hide cash flows—that other avenues don’t provide. In 2012, financial giant HSBC was hit with a record-breaking $1.9 billion fine for unwittingly allowing dirty cartel and terrorist money to be laundered through its coffers.

Due the huge spotlight now shining squarely on illicit financial activity, the US Department of Justice and the US Treasury Department are exploring different ways to combat money laundering beyond the traditional slap on the wrist of levying large fines on banks—to potentially include criminal indictments. However, prosecutors have yet to charge any bank employees or financial entity with a crime related to money laundering, largely due to the fear of causing instability in the US financial sector.

While fighting money laundering, especially at the local level along the border, is crucial, it’s also killing border businesses. A number of southern Arizona cattle ranchers say they are having trouble paying their employees, many of whom are Mexican nationals and have had their accounts closed in recent months. Other businesses told the Journal they are being unfairly targeted merely because of their proximity to Mexico.

Some banks believe that in some cases, it is easier to close accounts than spend the time and money necessary to achieve certainty that an account is safe. One bank executive said, “We are picking on Nogales in a way because the drug traffickers are picking on Nogales.” Bruce Bracker, the third generation to run retailer Bracker’s Department Store, countered, “Don’t paint us all in the same brush of drug dealers and money launderers. There are legitimate business owners, too.”

Sylvia Longmire is a border security expert and Contributing Editor for Breitbart Texas. You can read more about cross-border issues in her latest book, Border Insecurity: Why Big Money, Fences, and Drones Aren’t Making Us Safer.


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