The streets of Laredo

James McKinley, Jr. and Marc Lacey have an article in The New York Times:

The streets of Laredo are awash in money, stacks of grimy bills tainted with cocaine residue, wrapped in plastic, and stowed in secret compartments built into the trucks, buses, and cars that flow south over the Mexican border daily like a motorized river. Customs officials have discovered a host of ingenious hiding places, from $3 million secreted in the floor of a Mexican passenger bus to $1.6 million stuffed in duffel bags and balanced atop the heads of people wading across the Rio Grande to Mexico. At border crossings and airports alone, American customs officers seized $57.9 million in the fiscal year ending 30 September, up 74 percent from the previous year. And once the money lands in Mexico, it is easily swept into a largely unregulated underground cash economy or laundered through seemingly legitimate businesses.
As the United States has tightened bank regulations and clamped down on sophisticated money-laundering schemes in the past 35 years, more of the money from illicit drug sales is being smuggled across the border to Mexico the old-fashioned way, law enforcement officials say. American officials say stopping the bulk cash shipments and scuttling money laundering are critical to crippling the cartels in Mexico, which have unleashed a wave of violence that has claimed more than 15,000 lives since President Felipe Calderón began cracking down on their operations in December of 2006. Law enforcement officials and business owners in Mexico say that the assault on the cartels has driven drug traffickers to branch out into an array of other money-making ventures, setting up businesses like spas and day care centers to launder drug proceeds or selling new products like pirated movies or pilfered oil.
“It’s a natural evolution of criminal activity, just as with the mob in the 1950s,” said John Feeley, the deputy chief of mission of the United States Embassy in Mexico City. “They can’t continue to work on one illegal product.”
But Mexican authorities have yet to make much headway against money launderers, and customs officials say the cash they seize is still a trickle of what flows across the border. Joint operations of Customs, Border Patrol, and immigration agents set up checkpoints on southbound lanes every day, fishing for money. Customs officials have assigned 25 more teams of dogs and handlers to the task in the past two years. Mr. Feeley said that he expected Mexico and the United States to devote even more energy to going after the cartels’ profits.
Although United States authorities seized $138 million last year, that amount pales in comparison to the $18 billion to $39 billion a year the Drug Enforcement Agency estimates is being smuggled to Mexico every year. “There is an enormous amount of money that is flowing undetected and uninterdicted,” said John T. Morton, the assistant secretary for immigration and customs enforcement. “We are trying to be a step ahead of the people moving the money. Unfortunately, right now we are a step behind.” On the border, federal authorities play a constant cat-and-mouse game with the traffickers. The dealers employ spies to spot checkpoints, while informants tip off agents about the movement of cash.
In Mexico, the cash is relatively easy to launder, law enforcement officials say. Though the Mexican government has tightened bank regulations in the last nine months, drug cartels still buy real estate, businesses, automobiles, jewels, and other luxuries in cash without any reports of suspicious activity being made to the government. The sellers then make giant but legal cash deposits to the banks, and the money flows into the economy, Mexican government officials and experts on laundering said. “When the money is already integrated into the economy it’s very difficult to detect and the players there are not obligated to report it,” said Ramón García Gibson, a consultant to Mexican banks on money laundering. Nor is it a crime in Mexico to buy and sell dollars on the street. Thousands of informal money brokers exchange cash, and while they are not allowed to handle more than $10,000 a day per client, the rule is often ignored.
The money launderers are still outrunning the Mexican authorities. Though the main agency in the finance ministry charged with tracking money laundering has tripled in size in the past two years, it remains weak and overwhelmed with thousands of reports of questionable activity, officials there say. In the past year, they have referred about 600 cases to prosecutors, but only 18 were presented to the courts. “They just don’t have the capacity yet to do the investigation and make it stick in court,” said Shannon K. O’Neil, a Mexico analyst with the Council on Foreign Relations in New York.
No one knows precisely how much money is shipped across the border, but Mexican authorities say cash smuggled illegally into their country and then sent back to United States banks through Mexican financial institutions totals at least $10 billion a year. A good portion of that is pooled by foreign exchange businesses and then shipped back to United States banks in armored trucks, experts on money laundering said. Money is also smuggled out of Mexico to Colombia and other countries to pay cocaine producers.

Rico says there's more here, if you care.