Mexican National Sentenced to Four Years in Black-Market Peso Exchange Money Laundering Scheme

A Mexican national has been sentenced to four years in federal prison for his role in a two-year, multimillion-dollar trade-based money laundering scheme that moved U.S. drug trafficking proceeds to Mexico through a black-market peso exchange arrangement.

The U.S. Attorney’s Office for the Southern District of Texas said on August 19, 2026 that Gabriel Arturo Castillo, 52, of Monterrey, Nuevo León, Mexico, was ordered to serve 48 months in prison. Castillo pleaded guilty on April 8. As he is unlawfully present in the United States, he is expected to face removal proceedings after completing his sentence.

How the laundering scheme worked

According to the Justice Department, the conspiracy was designed to transfer proceeds from illegal drug sales in the United States to drug trafficking organisations in Mexico without physically moving the cash across the U.S.-Mexico border.

The network received large quantities of drug proceeds in cities across the United States. The cash was then either deposited into multiple bank accounts or transported to Laredo, Texas. From there, the proceeds were effectively sold to business owners in Mexico who needed U.S. dollars to purchase goods from U.S. merchants, including perfume sellers.

Those U.S. businesses received payment for the goods, and the merchandise purchased by the Mexican businesses was transported from Laredo into Mexico. The Mexican business operators then settled the other side of the transaction by transferring pesos in Mexico to the drug trafficking organisations.

This structure allowed the criminal network to convert U.S. drug proceeds into pesos for Mexico-based traffickers while disguising the movement of illicit value as legitimate cross-border trade. It is a classic black-market peso exchange model and illustrates how trade in ordinary consumer goods can be used to layer and repatriate criminal proceeds.

Investigation and prosecution

The Drug Enforcement Administration and IRS Criminal Investigation conducted the investigation. The Justice Department’s Office of International Affairs and its Office of the Judicial Attaché in Bogotá assisted, including work with Mexican law-enforcement partners that resulted in Castillo’s arrest and extradition to the United States in August 2025.

The case highlights why AML controls cannot focus only on cash deposits or wire transfers in isolation. Where commercial payments, cross-border merchandise flows and third-party bank accounts are used together, institutions may need to consider whether apparently legitimate trade activity is functioning as a mechanism for transferring criminal value.