Zetas headed to the white market

On a few occasions I have been invited to talk about the evolution of the Zetas, from elite bodyguards for Osiel Cardenas to a powerful criminal organization in their own right.

Two men now control the Zetas, Miguel Triveño, and Heriberto Lazcano.

Lazcano is the undisputed head of the Zetas and known to keep a cool head and think strategically. Triveño is more like a traditional Mexican drug lord with his ostrich skin boots, big cowboy hat, gilded pistol, and country-time apparel. Both men will kill on a moment's notice, but between the two, I believe that Lazcano has a mind for business and a long-term strategy for his visions of what the Zetas are today and what they are evolving into for tomorrow.

He doesn't want to go out like his former boss Osiel, who was extradited to the United States, never to be heard from again. And he certainly doesn't need to go down like one of his captains, El Hummer, who was found unguarded in a house in Reynosa.

My argument has focused on the idea that the Zetas are moving out of the black market, into gray and while market activities. From traditional drug and human trafficking and kidnapping and extortion, the Zetas have moved into the gray market of protection. I believe that Lazcano's men will offer protection to anyone who is willing to pay for it - from criminals who work for the Beltran-Leyva or Carrillo Fuentes organizations, to well positioned businessmen. In both cases, the client needs protection from other criminals, the police, and everyone in between.

And the Zetas have long demonstrated that this protection is something that they do best.

On 6 December 2009, a Dallas Morning News article further backed up my argument for the Zetas movement into the white, or legal, side of business in Mexico and abroad. The Gulf Cartel, and the Zetas by extension, have always invested in small businesses, which help launder money. But this article takes this consideration a slight step farther, and I think their sources are right.

Here's an excerpt:

"Aside from money laundering, the Zetas are seeking legitimacy from those they have terrorized over the years…Investigators and civic leaders say the Zetas are trying to position themselves to become movers and shakers, even political players, in communities where they have a major presence."

At the head of this strategy is "La Compania" - a term the Zetas started using for themselves in mid-2009 (maybe sooner) to differentiate less violent activities from the criminal branding already well established by the Zetas brand.

Looking ahead, I would not be surprised to see clean cut, respectable looking businessmen working for the Zetas as the group moves from looking and acting like Triveño and more like Lazcano.

And if law enforcement is worried now, they've got a lot to consider looking toward a future where a group as sophisticated, organized, and ruthless as Los Zetas goes from hiring bullet slinging thugs to clean-cut business mans. The evolution will be slowly and difficult to detect, but I think it's already underway with a long road to go yet.

Brazil: A fiscal paradise?

This is just a quick post to share some interesting information on Brazil and money laundering.

The OECD is pressuring Brazil to sign on to its Global Forum on Transparency and Information Exchange regime, branded as a "Partnership Against Corruption."

For most of his presidency, Lula has spoken out against so-called "fiscal paradise" countries around the world, where financial controls and laws governing money movement are both relaxed enough to invite would-be money laundering organizations to take residence.

Brazil has done it's fair share of anti-money laundering efforts, but it appears that in the eyes of the OECD, Brazil is still just another money laundering hub in Latin America. I would imagine that Brazil has opted not to join the OECD's club simply because under Lula's leadership, the country still has some affinity for the non-aligned movement, which would preclude any membership in such "aligned" organizations.

And perhaps more to the point, Brazil doesn't like to join a group that will tell it what to do, unless, of course, Brazil is at the head of the table, such as UNASUR.

Money Laundering in Brazil and Switzerland

A federal judge in Sao Paulo recently sent a letter to the United Nations and the Financial Action Task Force on Money Laundering to accuse Switzerland of violating a UN international convention because the Swiss government refused to inform a Credit Suisse employee that he had been subpoenaed to testify in Brazil.

The employee in question, Thomas Ulhmann, had been indicted in a criminal case in Brazil, accused of participating in a scheme that allowed Brazilians to open Credit Suisse bank accounts to launder money.

Switzerland does not have a bilateral money laundering agreement with Brazil, which forced the judge to arrange the subpoena through the 2003 Palermo Convention, signed by both countries, whereby both countries in theory should cooperate on matters related to money laundering.

Switzerland continues to snub the Brazilian judge, saying that Ulhmann did not violate Swiss laws.

This exchange has gone on amidst the larger debate over Switzerland's role in global money laundering practices. Switzerland has been included on the OECD and G-20 lists of "fiscal paradises." In response to this accusation, Switzerland has frozen all contributions to the OECD.

Finally, according to the BBC, some 70% of Brazilian overseas investments go to fiscal paradises. In 2008, some US$104 billion in Brazilian investments was placed abroad, with 50% of that money placed in Bahamas and the Caymans.