US Probes Mexican Exchange Centers for Cartel Cash

Mexico — For at least two years, Euro Dólar Casa de Cambio—a small establishment with a large Benjamin Franklin bill on its sign—located in Zapopan, served as a financial cog for money laundering by the Jalisco New Generation Cartel (CJNG), despite holding a license for currency exchange centers and being monitored by the National Banking and Securities Commission (CNBV).

At this modest business, at least six million dollars were laundered between 2020 and 2022. The foreign currency from its daily operations was mixed with money generated by drug sales by the CJNG, according to reports from the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury.

This case is not isolated. Data from the CNBV itself warns that more than 2,000 currency exchange centers have operated legally in the country—not counting unregulated ones—although not all of them meet basic operational requirements and become extremely vulnerable businesses for the laundering of funds.

Some of these foreign exchange intermediaries still fail to register their operations or their clients, do not submit quarterly reports, and conduct transactions for amounts exceeding $10,000—the legal ceiling—and many do not even have the necessary technology to store their data, despite receiving sanctions for it.

Currency Exchange Centers Under the Microscope

In just the last year and a half—from January 2024 to July 2025—the CNBV sanctioned currency exchange centers 259 times for violating current provisions regarding the Prevention of Money Laundering (PLD) in Mexico.

José Díaz Cuadra, founding partner of Legal & Compliance Advisors (LCA), said in an interview for EL CEO that currency exchange centers face significant challenges in anti-money laundering matters. The main challenge, he explains, is that they do not have complete records of those who carry out operations, as happens in traditional banks, which makes it difficult to trace the origin (licit or not) of the money.

Currently, these establishments are only required to record the identifications of users who conduct transactions and, based on them, limit the volume of operations to a maximum of $10,000 daily per person. However, factors such as access to technology, location, and even the number of employees influence the ability to comply with anti-money laundering regulations.

"There are operational limits per day or month for exchange operations by the same person. But there is no created transactional profile, so it is very easy to 'fly past' the limits," laments Díaz Cuadra.

'Discreet and Non-Compliant' Currency Exchange Centers

From January 2024 to July 2025, currency exchange centers in Mexico have accumulated 56.2 million pesos in fines, all of them linked to the prevention of money laundering.

The most notable case is that of Centro Cambiario Divisas Múzquiz, located in the municipality of the same name in Coahuila, with 20 sanctions amounting to 4.2 million pesos, mainly for failing to submit periodic reports of transactions and users.

Divisas Múzquiz stands out for its low profile and discreet operation. It is a small premises of just two meters wide, devoid of advertisements, security doors, or even a lighted sign with prices. Instead, a simple chalkboard on the sidewalk informs passersby of the day's exchange rate.

The company's articles of incorporation, obtained by EL CEO, reveal that Divisas Múzquiz was founded in 2020 by Luis Alejandro Fávila Rodríguez—who sold his shares after a year and a half as a partner—and Cruz Fernando Orozco García. Neither founder has a business history in the Public Registry of Commerce (RPC).

The company has accumulated non-compliance since its opening, without the sanctions having been settled or challenged. Surprisingly, the CNBV has not canceled its registration, despite having the authority to do so.

Díaz Cuadra, who is a specialist in compliance, suggests that these currency exchange centers—characterized by major non-compliance and modest premises—could have been created "innocently," seeking to offer a service in high-demand areas without full knowledge of the vast number of reports they must submit.

"There are people who find it easy to open a currency exchange center, and when they see the real regulatory burden, it is no longer profitable for them and they close it. That does not mean there are not others who do it intentionally: they use the infrastructure for a time to benefit economically and then leave," comments the expert, who also acknowledges the use of front men for these purposes.

Small Establishments, Large Fines

The scheme of small, discreet currency exchange centers that fail to comply with regulations is a constant in the sanctions imposed by the Mexican regulator.

A clear example is Centro Cambiario Ensenada, a modest establishment on the outskirts of Tijuana that has been fined 2.29 million pesos through 10 citations, all for failing to submit quarterly reports of its operations.

Another case is that of Echegaray Centro Cambiario, now closed. This establishment, also low-profile and located between the industrial zone of Naucalpan and the residential area of Ciudad Satélite, accumulated 3.9 million pesos in sanctions for failures in submitting operational reports.

Díaz Cuadra explains that this type of establishment—small, remote, and with few staff—often faces difficulties in complying with their regulatory obligations, such as submitting reports. This could explain the high number of sanctions, as regulations are often not a priority when there are few employees.

However, this situation can also lead to these establishments risking facilitating operations with resources of illicit origin, that is, money laundering, which could be an indicator of suspicious activity but has not been addressed immediately by the Mexican authorities.

A Pending Issue Between Mexico and the United States

With the start of the Donald Trump administration, regulations for exchange houses in the United States were significantly tightened. They must now report every transaction over $200 and record and provide customer identification data. This measure seeks to curb the flow of cash that ends up in cartel coffers.

Pending challenges persist in Mexico's exchange sector. One of them is the "renting" of licenses granted by the CNBV, a practice that facilitates the opening of irregular, duplicate, or "ghost" establishments under existing authorizations.

The authorities have pointed out this activity for over five years and have even established joint working groups with the United States. In bilateral meetings, the Financial Intelligence Unit (UIF) has committed to promoting a legal reform that modifies the maximum amount that can be exchanged in these places, according to minutes accessed by EL CEO.

Publicly, Santiago Nieto, former head of the organization, emphasized the need for a "correct diagnosis" to achieve a "real reform" in the area of currency exchange centers.

The proposal for regulatory change was taken up again a year ago during the convention of the National Association of Currency Exchange Centers and Money Transmitters (ANCECTD), and the creation of working groups for its implementation was proposed. However, since then, there has been no further news about the progress.

Meanwhile, US authorities continue to pressure for these regulatory changes.