Mexican companies reduced dollar cash deposits by 75 percent since President Felipe Calderon in September restricted some currency exchanges to fight money laundering by drug gangs, said Guillermo Babatz, president of the National Securities and Banking Commission.
The government banned the use of dollar bills for sales above $100 on Sept. 13 and required retailers to apply for a license to handle dollar deposits. Companies based in states that border the U.S. and in tourist areas are allowed to exchange as much as $7,000 for pesos monthly.
“We don’t want people buying cars with dollars in cash, or refrigerators, or plasma televisions,” Babatz, 41, said in an interview yesterday at his office in Mexico City. “The intention is to make it harder to launder dollars in cash that originate from illicit activities.”
Mexican banks accumulate as much as $14 billion of dollar bills of unknown origin annually, Babatz said. By limiting the use of U.S. bills in the economy, Calderon aims to cut into the profits of drug gangs that earn an estimated $30 billion annually selling cocaine, marijuana and methamphetamines to U.S. customers.
Violence tied to drug trafficking shaves off 1.2 percentage point from the economy annually, Finance Minister Ernesto Cordero said on Sept. 1.
The Sept. 13 measures don’t affect the peso’s exchange rate because money-changing is a fraction of currency trades between banks, Babatz said. Mexico’s peso gained 7.1 percent this year to 12.2254 pesos per U.S. dollar yesterday.
The restrictions that took effect two months ago limit cash dollar deposits by Mexican individuals to $4,000 a month. Foreign tourists can change as much as $1,500 monthly to personal accounts.
“This hasn’t been popular in some places, but we feel it’s necessary,” Babatz said. “We have to monitor the new rules to make sure there is no negative impact on legal business.”
Calderon asked President Barack Obama and the U.S. Congress this year to help him clamp down on money laundering of drug sales in Mexico. More than 28,000 people have been killed since Calderon started battling the cartels in December 2006.
Calderon proposed additional measures in August that make it illegal to buy property with cash and would ban gambling or the purchase of vehicles, airplanes and jewelry with more than 100,000 pesos ($8,179) in cash. Penalties would range from five to 15 years in prison.
Banks including Grupo Financiero Banorte SAB and Citigroup Inc.’s Banamex unit began imposing their own limits on some deposits earlier this year, before the Sept. 13 rule change.
Banamex spokesman Paulo Carreno said in May that the limits “benefit” clients, the bank and help the government fight money laundering.