Mexico’s continued reliance on cash vs. plastic and the fact that the border community depends heavily on Mexican shoppers creates an ideal situation for money laundering.

The issue surfaced during an interview with local accountant William Spater who attempted to find out why the accounts of a local client of his were closed without explanation by Bank of America after 10 years.

He got nowhere and neither did inquiries to the bank by the Nogales International.

“For privacy reasons, we do not disclose information about individual customer accounts,”� said Britney Sheehan, a BA spokeswoman. “I can confirm the existence of the policy, which allows us to close accounts at any time for any reason. I do not feel it would be appropriate for me to provide hypotheticals as to why we would close a customer’s account.”

Spater said he has handled the merchant’s business’ books “for the last 12 or 15 years” and has never suspected his client of any illegal activity or other misconduct. In his business checking account, the merchant, who asked not to be identified for security reasons, carried an average balance of $100,000. His personal savings account at BA averages about $200,000.

Raised suspicions

Spater speculated that his client’s voluminous cash transactions may have raised suspicions. “But what people don’t realize is that Nogales is a cash economy,” he said. “They look at the size of the community and compare it to the cash transactions and it may not make sense to them.”

Manuel Dominguez, community banking president for Wells Fargo Bank in Nogales, said, “Mexico is still very much cash-based” and that spills over to U.S. border communities, he said. “We are unique in that sense.”

Deputy City Manager John Kissinger said it has been estimated that as much as 60 cents per dollar in sales revenue in Nogales is generated by Mexican shoppers. Others say that figure is low.

Those Mexican shoppers, tourists and visitors, Dominguez said, pay in cash. That cash is then deposited into local banks. Business owners in Mexico have bank accounts on the U.S. side of the border as well and bring cash deposits.

Cash deals

Unfortunately it’s not just legitimate shoppers, shopkeepers and other businesses that deal in cash.

In congressional testimony, Donnie Marshall, former chief of domestic operations for the U.S. Drug Enforcement Administration, said, “The proximity of Mexico to the United States readily allows for the movement of drug profits through bulk shipments back to the drug syndicates in Mexico with relatively little risk,” he said.

Cashless society

However, Marshall noted, the United States is “quickly becoming a cashless society where the majority of our expenses are either paid by check or credit card. To deal exclusively in cash would raise suspicion as to the source of the income.”

Queried, Spater emphasized his client has had no run-ins with the law or federal government in relation to his business. He said the store’s books were recently audited by the Internal Revenue Service and the results were “perfect.”