A Currency Bet Nearly as Certain as Cartel Profits

There’s a way to make a quick profit thanks to Mexico’s drug cartels. And it’s perfectly legal.

It’s a currency trade, of all things, available every day inside Mexico City’s airport, where there’s a gap of about 3 percent between rates offered at dedicated exchange houses and local banks. Dollars bought cheaply from the currency dealers can be deposited at bank windows just a few feet away for a higher rate.

The airport trade is a weird bit of arbitrage created by the unintended consequences of efforts to combat narcotics trafficking in the U.S. and Mexico. Regulations aimed at curbing money laundering have made it so onerous to deposit large amounts of physical dollars in banks that the currency brokers would rather get rid of them at fire-sale prices.

“Churches, political parties, unions, to mention a few, all have this problem -- they get dollars in cash and are stuck with them,” Cesar Tello, the vice president of Mexico’s foreign exchange trade association, said in an interview from the capital. “If you have $100,000 and you can’t bank them, someone will be willing to take them for a price that’s not favorable.”

On Jan. 27, dollars could be bought at the Mexico City airport for 13.85 pesos. Within the same terminal, a bank will buy dollars for 14.3 pesos each. A Bloomberg News reporter used her own funds to purchase $100, then deposited the money into her account for a quick profit of 45 pesos. In the capital, that’s enough to pay for a Corona beer at the local cantina.

$125 a Month

The potential for profit is limited. Most banks will only buy dollars from people who already have an account, and Mexico regulations limit dollar deposits to $4,000 a month. Some banks have lower caps or won’t accept U.S. bills at all. Mexicans can open accounts at more than one bank, but based on an average profit in the neighborhood of 3.2 percent, and the trade isn’t going to earn more than about $125 a month per account.

Officials at Mexico’s central bank declined to comment about the exchange-rate discrepancies.

Ivan Aleman, a vice president at Mexico’s financial regulator who heads the department in charge of compliance, said officials are aware of how the regulations are affecting currency brokers and are working on a solution.

According to U.S. authorities, drug trafficking organizations send between $19 billion and $39 billion annually to Mexico from the U.S.

Sergio Espinosa, 36, who manages the Centro Cambiario Scarlett in Terminal 1, said it’s so hard to deposit dollars that he tries to sell and buy the same amount every day.

“As they come in, they go out,” he said in an interview. “We can’t open bank accounts to deposit our dollars because it would be considered money laundering.”