A U.S.-Mexico government study says from $19 billion to $29 billion is laundered by cash purchases in Mexico of land, luxury hotels, cars and other high-ticket items, the Los Angeles Times reported Friday.
The laundering means "breathtaking" amounts of cash escape detection and continue to fund huge criminal operations, the newspaper said.
The failure of Mexico to uncover money-laundering activities is seen as a major flaw in the country's offensive against the drug trade launched by President Felipe Calderon in 2006, experts say.
U.S. Immigration and Customs Enforcement Assistant Secretary John Morton admits the two governments have failed to disrupt the money trail.
"Simply arresting people won't be a full solution," Morton said. "We have to completely undermine the organizations as businesses, and to do this we have to identify, seize and forfeit their profits."
In Mexico, 75 percent of the formal and informal economy works through cash transactions, allowing cartel bosses unlimited opportunities to launder their profits with large purchases, the Times said.