Black market peso exchange rate in money laundering

Let’s spend some time talking about the Black Market Peso Exchange. This money laundering method is considered one of the most successful and efficient money laundering schemes in the world.

The Black Market Peso Exchange is a trade-based money laundering technique widely used by drug traffickers in Colombia and Mexico.

The central function uses a money broker to ensure that revenues from U.S. drug sales do not cross borders. Instead, those dollars are used to buy any number of legitimate goods from unsuspecting companies on behalf of legitimate South American businessmen, whose legitimate imports are used to generate pesos for the drug cartels.

Black market peso exchange

The Black Market Peso Exchange is not a new concept. Yet the recent settlement shows that the system has evolved to encompass the investment of dirty dollars in legitimate, high-value, profitable real estate.

The Black Market Peso Exchange (BMPE) is a trade-based money laundering system that converts drug dollars into local Latin American currencies.

In the 1980s, as organized crime adapted to increasingly stringent financial regulations that required traditional banks to know their customers and ensure their source of income was legitimate, BMPE became a key part of money laundering.

Clear Steps in the Black Market for Peso Exchange

Let’s take an example with a fictional drug cartel. In practice, it could be any criminal organization or even a legitimate organization trying to evade taxes, for example. This exemplary black market peso exchange involves six separate steps.

Step 1: Obtaining criminal proceeds

The first and obvious step is that there must be illegally obtained money that needs to be laundered. Let’s say a drug cartel sells $1 million worth of drugs in the United States. The business is received after a drug sale. The drug-selling organization in the United States collects and stores the money.

Step 2: Involvement of mediation services

Second, the drug-dealing organization contacts its cartel representative. The drug-dealing organization explains that it is willing to transfer the money owed to the cartel. The cartel representative informs one or more money brokers in South America of the US$1 million that is available in the United States. The money broker in South America then purchases the US$1 million at a discounted rate. The money broker then receives the US$1 million in cash and places it in the US financial system. The placement may be done through structured deposits using smurfs or other methods. The money broker is then given thirty days to transfer the equivalent of the local currency to the cartel in South America.

Step 3: Identifying Complicit Companies

Third, the money broker identifies exporting companies in the United States that plan to ship goods to South America, and importing companies in South America that plan to import goods from the United States.

Step 4: Payment from the exporter

Once the broker has identified a suitable import and export company, the shipping terms are defined. Then the broker pays the export company with the US dollar available in the United States.

Step 5: Shipping and selling of goods

The goods are then shipped to South America and received by the importer. The importer then sells the goods to his customers and receives local currency.

Step 6: Refund

Finally, the importer pays the money broker back in the local currency, such as pesos. The pesos received are then forwarded to the South American cartel. In this method, the cartel receives the proceeds of their drug distribution activities without the dollars ever leaving the United States.

Ultimately, the money was laundered without being physically moved to the United States.

Final thoughts

The Black Market Peso Exchange is the most extensive money laundering method in the Western Hemisphere. BMPE is a method of money laundering in which money earned through trade is embezzled through international trade and escrow accounts. It is also the process of disbursing and laundering profits from the illegal drug trade.

Despite strict regulations, Colombian businessmen were still able to access the US dollar thanks to the underground financial system that emerged in the 1960s.