How cartels move dirty money

MXPE Weekly Essentials ft. fallout from US Treasury bank bank, Mexico sneaks in tariffs by another name, and other highlights in Mexican politics, policy, and markets from the past week.

MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

An order to ban transactions from three Mexican banks from the US Treasury has shown the Trump administration’s declaration of drug cartels as foreign terrorist organisations is for real. CIBanco, Vector, and Intercam have all been accused of allegedly facilitating drug money transactions.

The political and financial effects were felt widely across Mexico (more in the Last week’s highlights section below). What has gone largely unexplained is how three medium-sized banks might have such an outsized role in the drug economy.

The importance of Intercam, Vector, and CIBanco lies in where they allegedly stand along the drug trade pipeline rather than how much money they hold or move. But really, the nature of drug financing reveals that these and most other banking institutions are actually pretty minor players in the grand scheme of things.

It turns out, drug money doesn’t need the permission of banks to enter the economy, neither does it need to cross borders as much as the drugs it is used to buy do. This is how cartel money moves: