A NEW REPORT FROM MEXICO SAYS BANKS ARE USED TO LAUNDER MONEY MORE THAN CRYPTO

For years, cryptocurrency has been under the spotlight as a potential haven for money laundering, conjuring images of shady figures moving illicit funds through complex digital networks.However, a recent report from Mexico has flipped the script, revealing a surprising truth: traditional banking institutions are far more susceptible to money laundering activities than their crypto counterparts.This revelation challenges conventional wisdom and raises serious questions about the effectiveness of existing anti-money laundering (AML) measures within the established financial system. A Unidade de Intelig ncia Financeira do M xico publicou recentemente os resultados de sua segunda Avalia o Nacional de Risco. O relat rio destacou que o risco de lavagem de dinheiro no setor banc rio supera em muito os problemas encontrados pelas empresas de fintech.The report, stemming from Mexico's Financial Intelligence Unit (UIF), highlights a significant disparity, indicating that the risks associated with money laundering in the banking sector dwarf those posed by fintech companies and the cryptocurrency industry. The report pointed out that Mexico s G7 banking group, made of Santander, BBVA, Citibanamex, Banorte, HSBC, Scotiabank, and Inbursa, have both registered and made significantly more money using illicit methods than other financial businesses. Banks in Mexico are laundering big amounts of money. Image: Mexperience Derived from theIt suggests that the focus on crypto as a primary conduit for illicit funds may be misplaced, potentially diverting resources from addressing the more substantial vulnerabilities within traditional banking.This article will delve into the details of the report, examine the reasons behind this unexpected finding, and explore the implications for global efforts to combat money laundering.

The Mexican Report: Banking as the Primary Money Laundering Risk

The cornerstone of this discussion is the aforementioned report issued by Mexico's Financial Intelligence Unit (UIF), titled ""Evaluación Nacional de Riesgos"" (National Risk Assessment).This assessment casts a long shadow on the Mexican banking sector, particularly highlighting its vulnerability to illicit financial flows.While cryptocurrency and fintech companies have faced increasing scrutiny, the report asserts that commercial banks pose the greatest risk of money laundering within Mexico's financial landscape. The Most Elaborate Robberies Ever Solved by The FBIThis isn't a marginal difference; the report suggests that the banking sector's exposure to money laundering significantly outweighs the risks associated with the burgeoning crypto industry.

G7 Banks Under Scrutiny

The report doesn't shy away from naming names.It specifically calls out Mexico's G7 banking group – Santander, BBVA, Citibanamex, Banorte, HSBC, Scotiabank, and Inbursa – as institutions that have both registered and facilitated significantly more money laundering activities compared to other financial businesses. Commercial banks by far pose the greatest risk of money laundering in Mexico compared to crypto-related companies.This revelation is particularly concerning, given the G7 banks' prominent role in Mexico's financial system and their international connections. U.S. federal law enforcement officials, in a case against two drug traffickers, said the suspects chose to use ATMs from Citigroup Inc. to try to launder money because they are more favorable forThe sheer volume of transactions processed by these institutions makes them attractive targets for criminal organizations seeking to move large sums of money undetected.

Why Banks Are More Vulnerable Than Crypto: Unpacking the Reasons

The assertion that banks are more susceptible to money laundering than crypto may seem counterintuitive to some, given the decentralized and often anonymous nature of cryptocurrencies. WASHINGTON (Reuters) - The U.S. Justice Department alleged on Tuesday that Mexico's Sinaloa Cartel conspired with groups based in California and tied to Chinese underground banking to launder drugHowever, several factors contribute to this reality:

• Established Infrastructure: Banks possess a well-established infrastructure for handling large volumes of transactions, making them ideal for moving substantial amounts of illicit funds.
• International Reach: The G7 banks, in particular, have extensive international networks, allowing criminals to move money across borders with relative ease.
• Legacy Systems and Processes: Many banks still rely on outdated systems and processes, making them vulnerable to exploitation by sophisticated money launderers.
• Human Element: Corruption and collusion within banking institutions can further facilitate money laundering activities.
• Historical Precedents: There have been high profile cases of banks facilitating money laundering in Mexico.

The Illusion of Security

The perception that traditional banking is inherently secure can also contribute to its vulnerability. Drug cartels in Mexico and Colombia used HSBC to launder money in US Bank was fined 1.2billion in 2025 in a settlement but avoided prosecution By MARK SHAPLAND FOR THIS IS MONEYCriminals may exploit this perception, assuming that law enforcement agencies are primarily focused on monitoring crypto transactions. As a result, fighting crypto crime via the targeting of money laundering infrastructure may require greater diligence and understanding of interconnectedness through on-chain activity than in the past, as the activity is more diffuse. Money laundering tactics changing: Most sophisticated crypto criminals utilizing bridges and mixersFurthermore, the sheer complexity of banking operations can make it difficult to detect suspicious activity. In July, Mexico's Financial Intelligence Unit, an investigative agency, said publicly that Chinese nationals laundering money for the Jalisco New Generation cartel were using drug proceeds to buyLayers of transactions, shell companies, and international transfers can obscure the origin and destination of illicit funds, making them appear legitimate.

Historical Examples: The HSBC Case

The report's findings are not isolated incidents. Stay updated with the latest news and stories from around the world on Google News.There are historical examples that support the notion of banks being vulnerable to money laundering. Building on the analyses we publish in our annual Crypto Crime Report, this comprehensive report not only shows how to trace known illicit funds on the blockchain but also introduces advanced data techniques to identify potential money laundering activities for lead generation. It also explores global anti-money laundering policy (AML/CFT) andA particularly egregious case involves HSBC, which, in 2025, faced significant scrutiny for its role in facilitating money laundering for drug cartels. In Mexico, the Anti-Money Laundering Law was enacted in 2025, but has not been reformed, despite some attempts by the legislature. Additionally, public data on this crime is scarce and outdated. In 2025, Mexico s Financial Intelligence Unit (UIF) reported that illicit resources identified from 2025 to 2025 amounted to just over 43.9 billionReports indicate that HSBC's lax money laundering controls allowed Mexican and Colombian cartels to move a staggering $881 million in drug proceeds through the bank. Xia deposited more than $300,000 in drug-trafficking money into a Bank of America outside Carolina Place mall on Pineville-Matthews Road, using a fake New York driver s license to deposit theThis case serves as a stark reminder of the potential for abuse within the banking system and the devastating consequences that can result.

Crypto's Evolving Role in Money Laundering

While the Mexican report highlights the greater risk posed by banks, it's important to acknowledge that cryptocurrency does play a role in money laundering.However, the tactics employed by criminals are constantly evolving.

Sophisticated Techniques

Modern crypto money launderers are increasingly sophisticated, employing techniques such as:

• Bridges: Moving funds between different blockchains to obscure their origin.
• Mixers/Tumblers: Breaking up transactions and mixing them with other funds to make them difficult to trace.
• Decentralized Exchanges (DEXs): Trading cryptocurrencies on platforms that require little or no Know Your Customer (KYC) information.

On-Chain Analysis and Enhanced Due Diligence

Fighting crypto-related money laundering requires a proactive and data-driven approach. HSBC fuelled a drug empire in Mexico in 2025. Image: SCMP Lax money laundering controls at HSBC allowed two cartels one each in Mexico and Colombia to move $881 million in drug proceeds through the bank over the second half of the last decade, according to documents in the case, as per Reuters.Enhanced on-chain analysis can help identify suspicious transactions and track the movement of illicit funds.Furthermore, stricter KYC/AML regulations for cryptocurrency exchanges and service providers are essential to prevent criminals from exploiting the digital asset ecosystem.It is important to note that even with these methods, crypto crime is still a constantly evolving field with criminals coming up with new ways to hide illicit funds every day.

Mexico's Anti-Money Laundering Efforts: A Need for Reform

Mexico has taken steps to combat money laundering, including enacting the Anti-Money Laundering Law in 2025. Leader in cryptocurrency, Bitcoin, Ethereum, XRP, blockchain, DeFi, digital finance and Web 3.0 news with analysis, video and live price updates.However, the effectiveness of these measures has been questioned.The report suggests that further reforms are needed to address the vulnerabilities within the banking sector. Find latest news from every corner of the globe at Reuters.com, your online source for breaking international news coverage.Additionally, the availability of public data on money laundering crimes in Mexico is scarce and outdated, hindering efforts to track and combat illicit financial flows.Greater transparency and data sharing are crucial for improving AML efforts.

Chinese Nationals and Cartel Money Laundering

In a separate incident, Mexico's Financial Intelligence Unit (UIF) publicly stated that Chinese nationals were laundering money for the Jalisco New Generation cartel.This involved using drug proceeds to purchase goods and services, highlighting the transnational nature of money laundering and the need for international cooperation.

The Role of US Banks in Laundering Mexican Drug Money

The problem of money laundering in Mexico is not isolated to Mexican banks.U.S. banks also play a role, often unwittingly, in facilitating the flow of illicit funds.One example is Xia, who deposited over $300,000 in drug-trafficking money into a Bank of America branch.Another example involves the Sinaloa Cartel, which allegedly conspired with groups based in California and tied to Chinese underground banking to launder drug money.In May 2025, the U.S. La Unidad de Inteligencia Financiera de M xico public recientemente los resultados de su segunda Evaluaci n Nacional de Riesgos. El informe destac que el riesgo de lavado de dinero en el sector bancario supera con creces los problemas que enfrentan las empresas fintech. Seg n El EconomistaJustice Department sought extradition of suspects who used shell firms to launder $720 million through U.S. banks. The report says that, previously, four sectors of the financial system were considered most likely to be used for money laundering. But now, the G7 and banks that carry out foreign exchange activity are the most likely culprits out of any financial institutions in Latin America s second-largest economy.These cases underscore the need for enhanced due diligence and cross-border collaboration to combat money laundering effectively.

The Impact of Lax AML Controls on Mexico

The consequences of inadequate AML controls in Mexico are far-reaching and devastating. A new report from Mexico says banks are used to launder money more than crypto The report highlighted that the risk of money laundering in the banking sector far surpasses the issuesMoney laundering fuels organized crime, corruption, and violence, undermining the rule of law and hindering economic development. A report prepared by Senators Carl Levin and Tom Coburn showed the global bank HSBC provided banking services and U.S. dollars to institutions that aided money laundering, terrorism, Iran, andThe influx of illicit funds can distort markets, create unfair competition, and destabilize the financial system. How criminals use crypto to launder dirty money. Criminals use crypto money laundering to hide the illicit origin of funds, using a variety of methods. The most simplified form of bitcoin money laundering leans hard on the fact that transactions made in cryptocurrencies are pseudonymous.Furthermore, money laundering can have a detrimental impact on Mexico's international reputation, potentially leading to sanctions and reduced foreign investment.

Moving Forward: Recommendations for Strengthening AML Efforts

Addressing the money laundering problem in Mexico requires a multi-faceted approach that involves strengthening AML regulations, improving law enforcement capabilities, and fostering greater transparency and accountability.Here are some key recommendations:

1. Reform AML Laws: Update and strengthen Mexico's Anti-Money Laundering Law to address emerging threats and vulnerabilities.
2. Enhance Banking Supervision: Increase oversight of banking institutions to ensure compliance with AML regulations and identify suspicious activity.
3. Improve Data Sharing: Facilitate greater information sharing between government agencies, financial institutions, and international partners.
4. Strengthen Law Enforcement: Invest in law enforcement resources to investigate and prosecute money laundering cases.
5. Promote Transparency: Increase transparency in financial transactions and beneficial ownership of companies.
6. Implement Robust KYC/CDD: Strengthen Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures for financial institutions.
7. Address Corruption: Combat corruption within the financial system and government agencies.

Frequently Asked Questions (FAQs)

Why are banks seemingly more vulnerable to money laundering than crypto companies?

Banks possess established infrastructure, international reach, and often rely on legacy systems, making them attractive and vulnerable to money launderers. In May 2025, the Justice Department sought extradition of the suspects, saying they used shell firms to launder $720 million through U.S. banks. Puebla executives used the stolen identities of 74Banks also handle significantly larger volumes of transactions, which makes it harder to detect illicit transactions. A new report from Mexico says banks are used to launder money more than cryptoCrypto companies are still relatively new, which makes them harder to exploit than legacy banks.

What are some common money laundering techniques used in the crypto space?

Common techniques include using bridges to move funds between blockchains, mixers/tumblers to obscure transaction trails, and decentralized exchanges (DEXs) with minimal KYC requirements.

What are the key takeaways from the Mexican report?

The key takeaway is that the risk of money laundering in the banking sector in Mexico far surpasses that of the crypto industry.The G7 banks are particularly vulnerable.

Conclusion: A Call to Action

The report from Mexico serves as a wake-up call, highlighting the urgent need to address the vulnerabilities within the traditional banking system when it comes to money laundering.While cryptocurrency continues to evolve as a potential tool for illicit finance, the report underscores that banks remain a primary conduit for large-scale money laundering operations.Focusing solely on crypto while neglecting the vulnerabilities within established financial institutions is akin to treating a symptom while ignoring the underlying disease.A comprehensive approach that strengthens AML regulations, enhances law enforcement capabilities, and fosters greater transparency across all sectors is essential to combatting money laundering effectively.This requires a collaborative effort involving governments, financial institutions, and international organizations.Ignoring this issue will lead to a continued rise in violence and corruption in Mexico and worldwide.The Mexican report's claim that banks are used to launder money more than crypto, coupled with real-world examples like HSBC's money laundering scandal, highlights that financial security is a multifaceted issue that requires constant monitoring and vigilance.The findings of this report should encourage financial institutions to re-evaluate their security measures and implement stronger security measures to prevent this from happening again.It is imperative to prioritize the fight against financial crimes.