Inside the Sinaloa Cartel’s Money Laundering Operations in Dubai

"Socalj" for Borderland Beat

Based on a Le Monde investigation by Bertrand Monnet

For two years, French business professor Bertrand Monnet plunged into the heart of the Sinaloa Cartel. Camera in hand, Monnet documented, for the first time, every stage of the narcos' business model, from the manufacture of fentanyl in the garages of Culiacan to the laundering of dirty money in the skyscrapers of Dubai.

Bertrand Monnet stated "I've been working on the Sinaloa cartel, and this cartel only, for about 10 years. In the beginning, a lot of narcos refused to meet me. A friend of mine, David Beriain, a famous Spanish journalist who was killed by ISIS in 2021, and who worked on the cartel for years, offered for me to meet a "middle manager" of the cartel. After two years, I gained the trust of this man and he arranged for me to meet the nephew of "El Chapo."

"Dubai is a paradise for us!" In the heart of Business Bay, the emirate's business district, Eduardo, a Mexican "narco," interrupts his selfie session in front of the Burj Khalifa tower, the world's tallest skyscraper, and home to the infamous Kinahan wedding and Super Cartel meeting in 2017; to explain to me how the various clans of the Sinaloa Cartel come to launder tens of millions of dollars there.

 


He works for one of them in a dual capacity. He exports tons of drugs, whether cocaine or fentanyl, an opioid 30 times more potent than heroin, and he then launders the profits from this idiosyncratic line of business.

For a clan like Eduardo's, which is particularly active in the business of fentanyl, trafficking generates enormous revenues. For the cartels, the profits amount to billions of dollars, which are, of course, laundered. The narcos and their financial advisors meet in Dubai to launder millions of dollars.

A few weeks earlier, in Culiacan, Eduardo deciphered, in a way, his organization's money-laundering methods to me. It wasn't anything too complicated or too secretive. The first phase of the operation, placement, consists of distributing the cash – in concrete terms, heaps of banknotes – into thousands of bank accounts. To do this, the cartels either inject the money into the treasuries of the hundreds of companies and businesses they control or deposit it directly into bank branches whose employees they bribe so that they won't report these deposits as suspicious.

Layering and Integration

After snorting a long line of cocaine in a small bag of powder that never leaves his side, Eduardo added that these methods are known to police forces across the entire world and that it is therefore important to move on as quickly as possible to the second phase, layering. The idea is to put the money beyond the reach of possible investigations by rotating it through thousands of other accounts, using trusts – companies whose real beneficiaries' identities are virtually inaccessible to investigators – and placing the money in tax havens. "Tax havens are just step one," he continued. "After placing the money there, we invest tens of millions in several countries." This investment phase is the final step: integration, the moment when the cartel injects billions of laundered dollars into the legal economy. Eduardo said, "We invest in construction companies, textile factories, real estate, hotels, supermarkets, in everything that recruits large investments, in Mexico, the United States, and Europe."

Tax Havens

The passage through a tax haven is therefore an essential step in the process. This is the point at which money transferred to an account opened at a local bank becomes virtually invisible to anyone other than its owner and the banker, who is bound to secrecy. Despite this, such a haven is not 100% safe for narcos. In theory, as part of international judicial cooperation, a foreign country can ask the authorities of the country in question to request information from banks about accounts suspected of belonging to wanted criminals.

For the Sinaloa narcos, the risk is undeniable. The US, frightened by the ravages caused by fentanyl on their territory, has declared such a war on this cartel that it is not impossible that the fortunes invested in Panama or the Caribbean will one day be frozen under pressure from Washington. The narcos therefore needed a safer haven: Dubai. Eduardo travels there frequently. "And not for the prostitutes and the party at this giant brothel," he explained, during our last discussion in Culiacan.

So here he is again, setting up a laundering network for his cartel. After a moment's reflection, he accepted my presence in Dubai. I've known him for five years now. He has seen me work in areas that are highly sensitive for the cartel and interview some of its executives without ever jeopardizing their anonymity or safety. "Here, the police don't investigate people like us at all," he told me in his hotel room. "Many cartel groups already launder their money in Dubai. We're going to do the same: see how we can transfer money from Sinaloa, starting with $1 million dollars to test the system, then going up to 50."

Dubai Partners

To achieve their goals, the narcos use trust companies – completely legal financial investment consultancies – which appear by the dozens in the emirate. Eduardo explained that one of his partners pointed him in the direction of a company he had been working with for years. Presented as a companion, I was able to attend this meeting.

"Pleased to meet you!" Two senior managers and a young consultant from the trust company warmly welcomed us to their splendid offices in one of Business Bay's many skyscrapers, as they guided us to a meeting room. "We're very happy to have you here. What can we do for you?" asked the one who appeared to be one of the directors. Eduardo responded that he wanted to invest some money that was currently in Mexico. "In Sinaloa," he said with a smile as if to signify its criminal origin. 

He added that his funds, which belonged to a group of friends, came in several forms (cash, bank accounts, cryptocurrencies). "Do any documents exist to justify the origin of this money?" asked the manager. Eduardo answered in the negative. "Where does it come from?" the manager continued. "Prohibido business," replied the narco, laughing softly. "Okay, okay," said the financial advisers.

After a brief silence, the second executive jumped in and addressed the manager: "Maybe we can start with the money that's in accounts?" The desire to open an account in Dubai without being able to justify the origin of the funds could be met with a refusal from the banks, so it would therefore be advisable to take an additional step. However, he claimed to know of less fussy establishments in Montenegro – "pragmatic partners," they said – through which the funds in question could transit. Once they had passed through Montenegro, they could be transferred to Dubai without any problem.

The emirate is notoriously uncooperative with foreign judges who request the seizure of narco funds. However, for safety and to avoid any unpleasant surprises, the money could be transferred again once it reached Dubai. "To Hong Kong, on a life insurance policy," suggested the young consultant, pointing out that the authorities in this Chinese-controlled territory do not cooperate with Western states.

However, the journey would not be over yet, from Hong Kong, the life insurance policy would be directed to an account in a Caribbean bank (in other words, another tax haven), where no one would know who owns it. It's a classic money-laundering scheme, applicable to dozens of fiscal havens.

Dubai Real Estate

"How much do you want to transfer?" the manager asked Eduardo. "We'll start with $1 million, and then there will be more later." The manager replied, "More? You mean a lot more?" Realizing from the narco's positive response that this was a matter of tens of millions of dollars, he suggested that he opt for absolute security instead: real estate, right here in Dubai.

With $146 billion in assets held by foreigners, the emirate is one of the world's largest offshore real estate centers. The major advantage of this type of "hard" investment is that it is not covered by the exchange of information between countries as part of judicial cooperation arrangements. Once the money has been invested in real estate, it is invisible to the United States. 

"You can buy real estate directly from Mexico. To start with $1 or 2 million per apartment. After that, you sell the property and, from there on, the money is clarified," continued the manager, in an elegant manner that allowed him to avoid uttering the word "laundered."

Asked by Eduardo about the investigations that the Dubai authorities could make into these investments from Sinaloa, the manager assured us that there was no such risk. "Then, you can invest in private equity, set up a business, buy a successful restaurant, or invest in a real estate complex: at the moment, we're managing a $400 million project."

I didn't attend the following meeting that the financial advisors proposed to Eduardo, and I don't know whether they did business or not. But those 45 minutes spent with a member of the Sinaloa cartel and financial advisors in a Dubai high-rise helped me understand that to counter this powerful criminal organization and eradicate its most deadly business, fentanyl trafficking, it's not just the narcos in Mexico that need to be fought. We must also fight against the opacity of tax havens, the black holes of global finance.

Sources Le Monde, Le Monde