Is the U.S. serious about fighting organized crime in Mexico?

I recently met with a high-level PAN official from the Calderón administration. The official said some things which were very interesting. (I cannot identify the official.) First, the Calderónistas do not see much (if any) substantive policy space between them and the new Peña administration. This is in line with the common feeling that the outgoing PAN president supported the PRI candidate over the candidate of his own party.

Second, the official (do note that I am not even using a pronoun) admitted that Mexican officials do not care how many illegal narcotics cross the border heading north. They do, however, care when the people who earn profits from that traffic suborn justice and bribe officials in Mexico, and they really care when they use violence. That said, they believe that much (in fact, the official intimated it was most) of the violence comes from fighting over the rights to sell drugs within Mexico. This was said in surprisingly blunt terms, but it was not surprising: the administration openly suggested that legalization might be a good idea as early as 2010.

Finally, the official said that they had great cooperation from the United States on everything except ... stopping money from flowing back to Mexico. On that, neither the Bush nor Obama administrations wanted to do much. There was no appetite on the low end to search southbound vehicles for cash in trunks, and there was no appetite on the high end for ... well, click this link and then this one.

The second link will take you the first stories about HSBC’s laundering of narcotics profits going from the U.S. to Mexico. What happened? Well, the United States eventually reached a $1.92 billion settlement against the bank. $1.92 billion! That’s a lot of money! HSBC profits fell 17%!

Only ... well ... the Mexican ex-official was not satisfied. Consider. HSBC earnings went from $16.2 billion to ... $13.5 billion. The CEO’s take home pay declined ... from $8 million to $7.4 million. The number of employees who earned bonuses above £1 million went from 192 ... to 204. 

It is true that the fine wiped out any HSBC profits from moving illicit earnings. The problem is twofold. First, you have let people move blood money, an action that actually carries criminal penalties, but you imposed no criminal penalties! It is easy to agree with Senator Warren (D-Massachusetts) that this is an outrage.

But there is another problem. There is, right now, if you are a bank moving illicit funds, there is a low chance of getting caught. So if the idea is to disincentivize money-laundering, you need to do a lot more than just wipe out the potential profits. You need to wipe-out the risk-adjusted potential profits.

And that the United States did not do.

Which brings us back to the title of this post. Are we? Really?

Comments

[Eric Moore]

no.