Businesses in the downtown Los Angeles Fashion District were ordered to report every cash transaction of more than $3,000 in an effort to curb the pervasive cross-border money laundering that sparked a law enforcement sweep of the area last month, federal authorities announced Thursday.
Failure to comply with the Geographic Targeting Order — which imposes stringent reporting and record-keeping obligations on many of the district’s 2,000 trades and businesses — could lead to a criminal indictment, officials said.
A federal probe revealed that money laundering activities and Bank Secrecy Act violations are common throughout the Fashion District. During the Sept. 10 sweep, federal agents seized more than $90 million in cash from various residences and businesses stored in file boxes, duffel bags, backpacks and even in the trunk of a Bentley.
Much of the money laundering is conducted through Black Market Peso Exchange schemes, also known as trade-based money laundering, in which drug money in the United States is converted into goods that are shipped to countries such as Mexico, where the products are sold and money in the form of local currency goes to the drug trafficking organizations.
Acting U.S. Attorney Stephanie Yonekura said her office sought the order — which goes into effect Oct. 9 — from the Financial Crimes Enforcement Network “with the goal of shutting down the flow of dirty money to foreign drug cartels — a huge problem that has contaminated the Fashion District.”
In last month’s crackdown, investigators “seized tens of millions of dollars in cash from individuals with business interests in L.A.’s garment district,” said Claude Arnold, special agent in charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in Los Angeles.
“That’s a mind-boggling amount of money and it makes it abundantly clear the scale of criminal activity we’re up against,” he said. “International drug cartels generate billions of dollars a year in profits, but all that cash is virtually worthless unless traffickers can find a way to funnel it clandestinely back into the monetary system. Unscrupulous companies that help the cartels cover their financial tracks are contributing in a major way to the devastation wrought by the international drug trade and they will be held to answer for their actions.”
— City News Service