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Colorado money service businesses, such as check-cashing businesses and money forwarding services, filed a record number of reports last year of possible money laundering by people using their services, official data shows.
In 2023, money services businesses flagged more than 22,000 transactions in Colorado they suspected were intended to convert money from crimes into usable cash, according to data from the Financial Crimes Enforcement Network, known as FinCEN. That’s a 40% increase from the previous year and a 1,009% surge since 2014.
The increase comes as federal authorities are eyeing the role money services businesses play in allowing fentanyl dealers — many associated with the Sinaloa and Jalisco cartels in Mexico — to illegally send profits back home in hard-to-trace transactions.
“Over the past few years, the DEA Rocky Mountain Field Division has had a number of successful investigations and prosecutions which involved specific MSBs acting as a means by which the cartels laundered their drug proceeds,” said David Olesky, acting special agent in charge for Drug Enforcement Administration in Colorado.
In May, Colorado DEA agents reached out to nearly 200 money services businesses in the region, seeking cooperation to combat money laundering. So far, none of those businesses have faced charges or are under investigation, the DEA said.
Money services businesses, or MSBs, offer financial services such as foreign currency exchange and international money transfers. Around 2,000 such businesses are based in Colorado, but only 302 of them exclusively operate in the state, according to the FinCEN database.
The DEA, FinCEN and the U.S. Attorney’s Office in Colorado all declined to comment on possible causes of the apparent rise in money laundering by people using MSBs.
But national and international organizations have also warned about MSBs being primary channels for fentanyl money. According to a 2019 FinCEN report, “money laundering organizations hire loosely associated parties to send money transfers to Mexico via U.S. MSBs.”
In a 2022 report, the Financial Action Task Force, a global money laundering watchdog, stated that fentanyl cartels frequently purchase wire transfers and money orders at multiple MSBs over a short period.
Financial institutions that suspect their services have been used to commit crimes must file suspicious activity reports with the federal Financial Crimes Enforcement Network if the transactions involve sums of $2,000 or more.
FinCEN collects, analyzes and disseminates these reports to support financial crimes investigations by law enforcement agencies. In the past, suspicious activity reports filed by MSBs were crucial to prosecuting drug trafficking and money laundering cases.
Since 2021, Colorado has ranked among the top 5 states with the most suspicious activity reports issued by MSBs for money laundering suspected activity. “Elevated suspicious activity reporting does reflect a genuine increase in certain types of criminal activity,” according to a Thomson Reuters Institute report from last year.
So far this year, MSBs in Colorado issued more than 2,500 reports of possible money laundering. That’s less than half of the 5,200 reports issued during the same period in 2023. But it’s roughly in line with figures from 2021, which had an estimated 2,700 suspicious activity reports during the same period and ended up with the second-highest number on record.
According to the DEA, last year $63 billion was sent to Mexico from the U.S. through MSBs. That includes legal transfers in which immigrant workers sent money to family or friends back home, Olesky said in a statement.
There is no solid estimate on how much of this money was related to illegal activity. People involved in money laundering generally try to obscure the source of the funds through lower dollar amounts but higher frequency transactions.
The scrutiny of fentanyl proceeds comes as overdose deaths involving the drug have surged in Colorado, alongside DEA seizures of fentanyl, preliminary data released by the Colorado Department of Public Health and Environment shows.
“Fentanyl is ravaging our nation and Colorado is no exception,” said Matt Kirsch, U.S. Attorney for the District of Colorado. “Our office is working every day, with our federal partners, to fight this battle.”
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