The undercover agents were introduced to some of those bankers by Victor Manuel Alcala-Navarro, an alleged underling to a Juarez cartel money broker in Chicago.
One meeting led to another and soon, prosecutors said, the agents had a long list of Mexican bankers eager to help them launder the money although the agents made it clear that the funds came from drug sales. In return for their assistance, the bankers were given a 1% commission.
A federal prosecutor in Los Angeles said most of the bankers were not surprised when made aware of the source of the money and told the agents that laundering drug money was a common practice in Mexican banking.
The investigation found that nearly 100 U.S. bank accounts were used by the drug traffickers, but authorities said they found no evidence that American banks were aware of the money laundering.
If convicted, the defendants face penalties ranging up to life in prison.
Michael McDonald, a former top IRS money laundering investigator, said Mexico had been a money laundering haven with few controls in past years. However, he said, the Mexican government--working closely with U.S. authorities--had implemented some of the toughest money laundering controls in the world, covering securities deals as well as banking transactions of more than $10,000.
All banks have been issued manuals explaining how to spot suspicious transactions. An FBI-trained unit with 30 full-time members was created in January to investigate money laundering.
Ramirez de la O, a prominent Mexican economic analyst, cautioned that however comprehensive the new money laundering regulations may be, "the Mexican bankers have demonstrated time and again that they find all these ways to go around the law."
He also noted that there had long been a cozy relationship between the authorities and bankers, who "enjoy an unknown degree of protection from some government officials."
McDonald, who now consults from Miami on money laundering issues, said: "This is going to materially disrupt the money laundering cycle of the Colombian and Mexican cartels, at least temporarily." He added, however, that "money laundering is like a water balloon. You step on one side, and it pops up on another."
The Mexican attorney general's office and Finance Ministry joined the Bankers' Assn. in pledging full cooperation with the U.S. investigation. All of them appeared surprised by the announcement.
In a separate development Monday, the Federal Reserve said it had issued "cease and desist" orders against five foreign banks, including two of those under indictment, for failing to address serious deficiencies in their anti-money laundering programs.
Those banks are Banca Serfin, Bancomer, Banamex and Bital of Mexico and Banco Santander of Spain. Each operates offices in the United States.
The order requires the banks to implement new anti-money laundering procedures.
Rosenzweig reported from Los Angeles, Sheridan from Mexico City. Times staff writer Jim Smith in Mexico City contributed to this story.
