Drug kingpin Joaquín "El Chapo" Guzmán’s Investment in Clothing used to Launder Money

Mexican drug kingpin Joaquín "El Chapo" Guzmán was jailed for life in the US for international drug smuggling and money laundering. Guzmán, head of the Mexican Sinola Cartel, made so much money from drugs that he once made it on the Forbes Rich List with an estimated wealth of €1bn, with a reported €14bn having been earned during his “career” from the proceeds of crime. With all this money being generated surely one of El Chapo’s biggest headaches was finding ways of laundering it – so how did he do it?

Guzmán’s primary market was the US which meant most of the cartel’s income would have been in US dollars. In order to launder this money, Guzmán would have needed to have found methods of getting the money into the US banking system. Despite US bank’s having controls against money launders – criminals find ways to exploit the system resulting in the proceeds of crime entering the banking systems.

One method Guzmán’s cartel used to get the money into the banks was through the concept of Smurfing. Smurfing is the method of breaking up a transaction involving a large amount of money into smaller transactions below the reporting threshold. In the US, the Banking Secrecy Act (BSA) sets this threshold at USD$10,000. Whilst this method of laundering is relatively easy to identify through transaction monitoring systems and techniques, the size of Guzmán’s cartel could have resulted in tens of thousands of individuals making seemingly random and innocuous payments in the US banking system which would have been more difficult to identify.