Felipe Calderon, the retiring Mexican President, signs into law a bar on huge cash transactions in the country. A government effort to control money flows into the country, this law will be effective in around three months.
It will create a specialized unit in Financial Analysis that will scrutinize any financial operations that originate from unknown resources. This unit will operate within the attorney General’s Office.

The new law will also prohibit cash payments over half a million pesos ($38,750) for real estate transactions and cash payments over 200,000 pesos ($15,500) for automobiles and other items such as jewelry, lottery tickets and art. The law also has a minimum punishment of five years in prison.
In year 2010, Mexico introduced stringent control on forex cash transactions up to $1,500 per person every month. This became equivalent to penalizing tourists and resulted in many cash dollar exchanges to pull out from the business.

The effort is largely aimed at US dollars, which form a big portion of the actual paper cash in the country. The Mexican pesois the most traded currency in Latin America and the 12th most traded in the world.

According to a Reuters report, “Sales of drugs from marijuana to cocaine and methamphetamine in the United States are worth about $60 billion annually, according to the United Nations. About half of that amount is estimated to find its way back to cartels in Mexico.”

As per an article on Global Post, Mexico loses around $50 billion a year in various types of illegal monetary outflows. This forms around five percent of the country’s total GDP and the main types of outflows include those through tax evasion, money laundering and corruption, as per a Washington DC-based nonprofit group Global Financial Integrity.

In May 2012, the Mexico Institute of the Woodrow Wilson International Center for Scholars issued a report titled “It’s all about the Money.” This report suggested coordination and tight integration with the US in the fields of financial institution regulation, non-conviction based asset forfeiture, legal framework and intelligence on cross-border monetary flows.
The new law also requires real estate brokers, notaries and other dealers involved in transactions above the recommended limitsto report the payment type. Financial companies will also need to report credit card balances exceeding 50,000 pesos ($3,875) every month.

While most governments worldwide follow this trend, Mexico is still in the beginning phases. Recently, Italy and Spain have also placed prohibitions on cash transactions over €1,000 and €2,500, respectively.