LOS ANGELES — As part of a crackdown on an alleged money-laundering ring linked to drug cartels in Los Angeles’ fashion district, the Department of Homeland Security’s U.S. Immigration and Customs Enforcement has ordered certain businesses in the apparel and textile industry to report more of their cash transactions.
This story first appeared in the October 6, 2014 issue of WWD. Subscribe Today.
Effective Oct. 9, the guideline requires some 2,000 businesses in the fashion district to report any transaction involving more than $3,000 in cash. Failure to comply could lead to a criminal indictment. The companies affected include stores that sell apparel, textiles, shoes, lingerie and beauty supplies; transportation companies, and businesses whose names bear the words “import” or “export.” The order is in effect for 180 days.
Federal agencies are targeting trade-based money laundering in which drug money in the U.S. is converted into goods that are shipped to countries such as Mexico, where the products are sold and money converted into local currency is funneled to the drug-trafficking organizations.
The mandate follows a raid conducted last month by more than 1,000 agents from U.S. Immigration and Customs Enforcement, the Federal Bureau of Investigation, Internal Revenue Service and Drug Enforcement Administration. Scouring more than 40 locations, including stores in the fashion district and warehouses, agents seized more than $60 million in cash, $19 million in domestic bank deposits and made multiple arrests. Afterward, U.S. Immigration and Customs Enforcement also seized three homes in Pasadena and Alhambra.
“Individuals who laundered money through the fashion industry will now be hard-pressed to continue their criminal activities,” said Richard Weber, chief of Criminal Investigation at the IRS.