The law, proposed two years ago by outgoing President Felipe Calderon as part of his offensive against drug gangs, was passed by the Senate on Thursday. The lower house passed it earlier this year.

The new federal law puts restrictions on cash purchases of real estate, jewelry, armored cars and other assets that criminals use to launder illicit funds.

Companies will be required to report large cash purchases under the law. Car sales of more than 200,000 pesos (about $16,000) and real estate purchases of more than 500,000 pesos (about $39,000) must be reported.

The bill carries a minimum penalty of five years in prison.

“There is an outcry from society to weaken the financial structures of organized crime and that is what this law is about,” said Senator Roberto Gil, a member of Calderon’s conservative National Action Party.

Nearly 60,000 people have been killed since Calderon launched a military-led assault against drug cartels after taking office in late 2006.

Dozens of drug lords have been killed or captured since then but Calderon and the country’s lawmakers have been criticized for not doing enough to attack finances of the cartels.

Sales of drugs from marijuana to cocaine and methamphetamine in the United States are worth about $60 billion annually, according to the United Nations. About half of that amount is estimated to find its way back to cartels in Mexico.

The scale of the country’s money laundering problems leapt to global attention in July when a U.S. Senate report accused bank HSBC of failing to keep tabs on shady deposits at its Mexican operation.

The report focused on $7 billion shipped by the bank from Mexico to the United States between 2007 and 2008. HSBC admitted it had failed to follow money laundering rules and paid 379 million pesos ($29.45 million) in fines.

Hot money also has tainted everything from beauty pageants to the Mexican presidential elections this year, where the Institutional Revolutionary Party, known as PRI, of President-Elect Enrique Pena Nieto was accused by rivals of campaigning using illicit funds. The charges were not proven.

“We have to stem the flow of dirty money in Mexico, which has been the main driver of the growing violence in the country,” said Senator Arturo Zamora of the PRI.

Pena Nieto, who will return the PRI to power when he takes office in December, has said he will fine-tune the strategy to reduce violent crime linked to the drug war. [ID: nL2E8I432R]

The bill now goes to Calderon’s office for ratification. In order to give authorities time to prepare to enforce the law, it will take effect nine months later.

Zamora said estimates for the amount of illegal funds laundered in Mexico range from about $10 billion a year to as high as $45 billion. DM

Photo: Federal agents from the Attorney General’s Office (PGR) escort Francisco Javier Cantabrana Parra (C) as he is taken to a maximum security prison outside Mexico City, October 1, 2012.  REUTERS/Alejandro Dias