Financial Transparency Coalition

White House

In a joint press conference with Salvadoran President Funes last week, President Obama announced that—through the Central American Security Partnership program—$200 million will be provided to fight drug cartels and organized crime in the region.  The President noted that the money will be used to address “the social and economic forces that drive young people towards criminality,” as well as “help strengthen courts, civil society groups and institutions that uphold the rule of law.”  While this is a more comprehensive effort than has been previously seen, the Obama administration’s plan of attack still falls short.

Traditional approaches to combating drug trafficking and organized crime involve strengthening law enforcement and border control, seizing narcotics, and interdicting criminals in the act.  The new regional initiative shows a shift from the more traditional approach to one that includes preventative measures such as investment in social policies, creation of more economic opportunities for Salvadorians, and efforts to address the demand for drugs by reducing consumption. All of these methods are important steps towards the goal of clamping down on drug trafficking and organized crime.  However, if these governments really want to start seeing tangible results, they need to go after the money.

A recent report from Global Financial Integrity estimates the value of the global drug trade at approximately $320 billion annually.  Limiting the avenues through which this criminal money can travel will be a critically important tactic in curtailing the trade.  Indeed, last year Wachovia Bank agreed to pay $160 million fine “to settle charges [. . .] that lax controls allowed Mexican drug cartels to launder millions of dollars through the bank.”  In order for the President’s regional effort against organized crime to be successful, it is imperative that the banking industry’s due diligence and know-your-customer activities be strengthened in order to monitor and curtail the laundering of money.

Earlier this month, the U.S. Government Accountability Office released a report revealing that the U.S. Customs and Border Protection agency seizes just one percent of drug money that crosses the U.S.-Mexican border each year.  That is the crux of the matter.  Drug cartels remain extremely successful because they have the financial capacity to penetrate and corrupt state institutions from the local police officer all the way up to the judge and the lawmaker.  In order to stop the crime, we have to stop the money.   How did the United States finally put notorious gangster Al Capone behind bars?  They charged him with tax evasion.