Background:
In June 2010, the Mexican government announced regulations limiting deposits of U.S. cash in Mexican banks.1 Several months later, the Mexican government expanded the restrictions to include cash deposits made at exchange houses (casas de cambio) and brokerages (casas de bolsa). In 2011 and 2012, FinCEN issued two advisories that detailed the rise of funnel account use (also known as interstate or out-of-state funnel account activity) as a technique employed by individuals seeking to move illicit proceeds following the currency restrictions.
Law enforcement information and Suspicious Activity Reports (SARs) now show that Mexico-related criminal organizations: (i) continue to employ funnel accounts to move illicit proceeds and (ii) are using funnel accounts to finance the purchase of goods as part of Trade-Based Money Laundering (TBML) activity. In some instances, multiple funnel accounts have been observed to transfer funds into a single consolidated account from where the funds are subsequently withdrawn. Criminal organizations use wires and checks issued from funnel accounts to move illicit narcotics proceeds to the accounts of businesses offering trade goods and services as part of trade-based money laundering as further described below. Schemes such as the use of funnel accounts and TBML are a money laundering concern for both the U.S. and Mexican governments.
Link to the FinCEN directive: click here