Financial institutions: Beware of timeshare fraud being committed by Mexico-based TCOs

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Tuesday sanctioned several individuals for timeshare fraud they perpetrated on Americans via Mexico-based transnational criminal organizations (TCOs).

The Jalisco New Generation Cartel (CJNG) and other Mexico-based TCOs have increasingly targeted U.S. owners of timeshare properties in Mexico since at least 2012, according to the Federal Bureau of Investigation (FBI), which is working with OFAC and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to raise awareness about these crimes.

“Older adults, including retirees, are frequent victims in these schemes,” the agencies said in a joint notice issued July 16 . “The TCOs use proceeds from timeshare fraud to diversify their revenue streams and finance other criminal activities, including the manufacturing and trafficking of illicit fentanyl and other deadly synthetic drugs into the United States.”

The joint notice issued to financial institutions provides an overview of timeshare fraud schemes in Mexico associated with CJNG and other Mexico-based TCOs.

The 14-page joint notice also provides the methodologies, financial typologies, and red flag indicators associated with timeshare fraud in Mexico to help financial institutions identify and report suspicious activity to FinCEN and law enforcement.

“Cartel fraudsters run sophisticated teams of professionals who seem perfectly normal on paper or on the phone, but in reality, they’re money launderers expertly trained in scamming U.S. citizens,” said Under Secretary for Terrorism and Financial Intelligence Brian Nelson. “Unsolicited calls and emails may seem legitimate, but they’re actually made by cartel-supported criminals.”

Nelson warned that if something seems too good to be true, it probably is.

“Treasury and our partners are deploying all tools available to disrupt this nefarious activity, which funds things like deadly drug trafficking and human smuggling,” he said, “and we encourage the public to use our resources to stay vigilant against these threats.”

Specifically, OFAC yesterday sanctioned three Puerto Vallarta-based accountants and four Mexican companies linked, directly or indirectly, to timeshare fraud led by the CJNG.

OFAC said it coordinated the action with the Government of Mexico, including its financial intelligence unit, Unidad de Inteligencia Financiera (UIF), as well as FinCEN, the FBI, and the U.S. Drug Enforcement Administration.

According to the Treasury’s statement, TCOs operate call centers in Mexico with scammers impersonating U.S.-based third-party timeshare brokers, attorneys, or sales representatives who target and defraud U.S. owners of timeshares in Mexico.

The victims often send payments to the scammers through wire transfers via U.S. correspondent banks to Mexican shell companies with accounts at Mexican banks or brokerage houses before the funds are further laundered in Mexico through additional shell companies and trusts controlled by cartel members, their family members, or third-party money launderers, the statement says.

Financial institutions with customers who are victims of timeshare fraud in Mexico are encouraged to file a complaint with federal law enforcement to activate FinCEN’s Rapid Response Program to potentially interdict and recover the fraudulently stolen funds in partnership with Mexico’s UIF.

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