The structure of drug trafficking organizations and money laundering practices: a risk appetite hypothesis

Farfán-Méndez, Cecilia (2019) The structure of drug trafficking organizations and money laundering practices: a risk appetite hypothesis. Journal of Illicit Economies and Development, 1 (3). 294 - 311. ISSN 2516-7227

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Abstract

Scholarly and policy literature has yet to provide a systematic analysis on how criminal organizations launder money beyond descriptions of who conducts this illegal activity and the existing types and practices for laundering the proceeds of crime. This article seeks to bridge the divide of two scant perspectives within illicit economies literature: one related to the structure of drug trafficking organizations (DTOs) and the other related to theoretical conceptualizations of money laundering. It provides a working hypothesis on how DTOs choose to launder money contingent on the risk appetite each structure has as a result of the investment in human capital they conduct at the managerial levels. Using Mexican DTOs as case studies (Arellano Félix, Sinaloa, La Familia Michoacana, and Zetas) and data collected during fieldwork with US and Mexican officials involved with anti-money laundering measures, I show hierarchical structures—understood as structures that process information and acquire knowledge—prefer risk-averse methods, whereas wheel networks tend to use risk-tolerant procedures for laundering money. These findings have important implications for theory development and policy design.

Item Type:	Article
Official URL:	https://jied.lse.ac.uk/
Additional Information:	© 219 The Author
Divisions:	LSE
Subjects:	K Law > K Law (General) H Social Sciences > HN Social history and conditions. Social problems. Social reform H Social Sciences > HC Economic History and Conditions
Date Deposited:	20 Dec 2019 11:27
Last Modified:	12 Dec 2024 02:01
URI:	http://eprints.lse.ac.uk/id/eprint/102971

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