Santiago Nieto, the head of the financial intelligence unit within Mexico’s Finance Ministry (Secretaría de Hacienda y Crédito Público – SHCP), said that his office filed a complaint against three businesses and seven people linked to the Jalisco Cartel New Generation (Cartel Jalisco Nueva Generación – CJNG) that have already been blacklisted by the US Treasury Department’s Office of Foreign Asset Control (OFAC), Reuters reported December 7.

This comes after the Finance Ministry announced on December 5 that it had filed its first complaint with prosecutors to initiate judicial proceedings against organized crime members for money laundering.

The US Embassy in Mexico said they “welcomed increased collaboration” with authorities in Mexico, according to Reuters. Both countries are offering multimillion-dollar rewards for information leading to the capture of the CJNG’s leader, Nemesio Oseguera Cervantes, alias “El Mencho.” In October 2018, several US agencies announced new “coordinated enforcement efforts” to “target and dismantle” the CJNG.

InSight Crime Analysis

Prosecutors in Mexico under former President Enrique Peña Nieto proved woefully incapable of investigating and prosecuting members of the CJNG — one of Mexico’s most powerful criminal organizations — fostering, in part, the group’s rapid rise. It remains to be seen if the administration of newly inaugurated President Andrés Manuel López Obrador will be more capable of taking on the group.

While Mexico has the institutional and legal framework to tackle money laundering, a low conviction rate suggests there is a “low degree of effectiveness” in how these cases are handled. This, combined with corruption at the state level, “undermines their capacity to investigate and prosecute serious offenses,” according to a January 2018 evaluation of Mexico’s anti-money laundering measures from the Financial Action Task Force (FATF), a global organization that sets standards for combating money laundering.

In September of this year, for example, El Mencho’s wife, Rosalinda González Valencia — who allegedly helps handle the CJNG’s finances — was released on bail just three months after she was arrested on organized crime and money laundering charges.

Complicating matters, tensions also appear to be rising between López Obrador and the judiciary over proposed budget cuts. The president wants to reduce the salaries of prosecutors while asking them to do more. López Obrador called those fighting for their pay “dishonest and insensitive,” adding that they don’t understand the “new reality.”

The money laundering prosecutions, however, could have an impact if implemented effectively. The CJNG has already suffered from authorities’ increased attention and is “worse off” than a few years ago, according to Jaime López, a security policy consultant and former Mexican police official.

Indeed, authorities have in recent years arrested several members of the González Valencia family — who are thought to head Los Cuinis, the CJNG’s money laundering wing. The US Treasury Department has also successfully seized a wide range of the cartel’s assets. In addition, internal fighting has caused the CJNG to splinter, effectively jeopardizing its power in key criminal regions.

Prosecutors’ ability to track and seize laundered money and other assets is crucial to combating organized crime. Whether authorities in Mexico have the will and ability to do so, López told InSight Crime, remains uncertain. 

“Combating money laundering is notoriously complex,” he said, “but the instruments are there, and the capabilities exist.”