Laundering Drug Money in a System of Silence : Smuggling: The Cali climate of acquiescence makes it easy to channel billions of dollars a year in profits into legitimate businesses, bank accounts.

Sabina Prieto doesn’t mind when drug dealers and their bodyguards in fancy cars stop by her hot dog stand. She’s happy to be making good money.

“I don’t look at their faces,” said Prieto, who has sold snacks for 20 years in a park overlooking Cali’s office towers and Spanish colonial buildings.

She is not alone. In a city that is home to traffickers who supply 80% of the world’s cocaine, many people--from street vendors to bank executives--do business without asking too many questions.

The climate of acquiescence makes it easier for the Cali drug cartel to launder money, channeling billions of dollars a year in profits into legitimate businesses and bank accounts.

But Cali is not alone in turning a blind eye to money laundering. The Colombian government has until now also largely ignored it.

Laundering drug money is not even a crime in Colombia. A congressional commission is just now considering a bill that would make it one.

Recently emerged from a bloody war with drug traffickers, Colombia’s government is on a new battleground. Instead of helicopter-borne soldiers raiding hide outs and shooting it out with traffickers, investigators are looking at accounting ledgers and financial statements, trying to find the “hot money” mixed in with the legitimate.

“We’re still in a very initial stage,” Prosecutor General Alfonso Valdivieso said in a press interview in his office in Bogota, the capital. “We have to recognize that we reacted very late. We lost time.”

Twenty officials at the prosecutor general’s office are just starting a course in finance to learn more about cartel money.

Cartel leaders are worried that a crackdown on money laundering will cripple their business, said a cartel associate, who spoke on condition of anonymity.

The Cali cartel is a more shadowy foe than the Medellin cartel, which fought the state with car bombs and assassins until security forces gunned down its leader, Pablo Escobar, last December.

Leaders of the Cali cartel are low-key businessmen with roots in industry and government.

After smuggling drugs out of Colombia, they smuggle cash back in, sometimes in boxes or suitcases. Traffickers, sinking their drug money into legitimate enterprises, are causing this city of 1.7 million people that sprawls at the base of a green Andean mountain range to bloom.

Pricey cars zip along broad boulevards, past whole blocks that are under construction or renovation. Chic boutiques and trendy nightspots abound.

“It’s Harley fever at the moment,” crowed a salesman at Harleymania, where the U.S.-made motorcycles sell for up to $35,000.

A U.S. law enforcement official who tracks drug money said drug profits are contributing to the construction boom in Cali and other Colombian cities.

The challenge of money laundering in Colombia is converting large amounts of U.S. dollars into Colombian pesos that are harder to trace.

Drug profits are most risky for the traffickers when they are still in dollars. A cartel associate carrying a large amount of dollars can be more easily tied to his superiors.

Once the cash enters a business or bank account and mixes with legitimate money, it is harder to trace.

Traffickers often avoid scrutiny by doing business with legitimate Colombian brokers and other businessmen whose capital is unlikely to be challenged by authorities. They invest in real estate and construction, car dealerships and even a hospital, always using front men.

“You would never be able to affix any of these projects or buildings with a drug trafficker,” said the U.S. law enforcement official, who spoke on condition of anonymity. “They always have other people do it for them.”

Traffickers use other gambits as well, sometimes buying cars in the United States and selling them in Colombia for the same price or lower. They may lose money, but they gain local currency that will not arouse suspicion.

Lottery winners have even been asked to exchange their peso jackpots for larger sums of U.S. dollars, the cartel associate said.

Although Colombian laws allow authorities to investigate the origin of someone’s wealth, they are not well enforced, said Francisco Thoumi, director of the Center for International Studies at the University of the Andes in Bogota.

Some politicians are reluctant to crack down on money laundering because they are also guilty of financial wrongdoing, Thoumi said.