Law enforcement agents last month seized more than $65m in bank deposits and cash in LA raids

Law enforcement agents last month seized more than $65m in bank deposits and cash in LA raids

More than 2,000 businesses in the Los Angeles fashion district are to be subjected to stricter reporting and recordkeeping rules in a bid to crack down on money laundering for drug cartels.

The far-reaching measures proposed by the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, come three weeks after law enforcement agents seized more than $65m in bank deposits and cash linked to money laundering during a series of raids on residences and apparel businesses in Los Angeles.

The new Geographic Targeting Order, or GTO, impacts most businesses in the fashion district and will go into effect on Thursday (9 October).

It is specifically aimed at fighting money-laundering schemes designed to allow international drug cartels in Central America and South America to reach drug proceeds generated in the United States.

FinCEN says its operations have uncovered evidence that money laundering activities and Bank Secrecy Act (BSA) violations are pervasive throughout the Los Angeles Fashion District.

Much of the money laundering is conducted through Black Market Peso Exchange schemes, also known as trade-based money laundering, in which drug money in the US is converted into goods that are shipped to countries such as Mexico, where the goods are sold and money now in the form of local currency goes to the drug trafficking organisations.

"This order requires nearly every business in the fashion district to report any instance in which they receive at least $3,000 in cash, and failure to comply with the order could lead to a criminal indictment," said acting US Attorney Stephanie Yonekura.

Businesses covered under the order include garment and textile stores; transportation companies; shoe stores; lingerie stores; and stores bearing "import" or "export" in their name.