Tracing the Finances of Ill-Gotten Gains: Mexico and the U.S.: Patterns and Potential Means of Tracking Illicit Financial Flows between Mexico and the U.S.

Money laundering has daunting effects on a country’s economy. Policymakers lack adequate  data that would help them quantify the phenomenon and take relevant action against it. Looking at  the specific bilateral case of the United States and Mexico, this paper aims to understand how much  laundered money is generated in each country from organized crime activities and how that money moves. This study uses the economic gravity model constructed by John Walker and Brigitte Unger (2006) to define illegal financial flows and adapts it for this study by refining the model’s attractiveness and distance indices and by introducing a new methodology to calculate the portion of  criminal revenues being laundered. This represents the first attempt to produce a transparent and comprehensive methodology to calculate illegal financial flows on a bilateral basis. With US $182  billion laundered in the United States each year and US$14.5 billion in Mexico, our data show that US$10 billion circulate each year between the two countries. Such figures call for urgent legal action from the Treasury Department as well as improved multinational cooperation.

Press Releases:

In Sight Crime (http://www.insightcrime.org/news-analysis/organized-crime-laundered-$10-billion-in-mexico-in-fy2011)
Geo-Mexico (http://geo-mexico.com/?p=6377)
Nterate de Todo (http://nteratedetodo.com/index.php?option=com_content&view=article&id=3566:narcotrafico-lava-10-mmdd-al-ano-en-mexico&catid=35:nacional&Itemid=63)