#1451 – The Expat Files: Banking Risks, Bitcoin Predictions, and Political Turmoil in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now I wonder Hello there all you ex-pad wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Alright got a boots on the ground story today. I think it's gonna shock you Though it's not something that's gonna make you think twice about having a plan B and get the hell out of dodge But it's gonna shock you I've got a couple other things to talk about today first

[00:45] So I hope we get to it first off you might have heard that the US Treasury Secretary Scott Besson Released on June 25th a press release announcing historic orders you call them targeting three Mexican financial institution three banks See I back Oh Intercom back oh and vector those three Mid-sized Mexican banks were accused last week of being primary money launderers for cartels Principally in connection with opioid and fentanyl trafficking. Well just a day later I got an email from a listener named Otto. He said Johnny a few weeks ago I was told at my local bank in Mexico that they were no longer accepting personal checks in US dollars And I don't bank he says at one of those three Mexican banks that was just put on the US shit list

[01:34] He said when I got that notice I knew there would be a surge of chatter in chats and fake book groups and it's American residents living in Mexico Are trying to figure out alternative methods for moving money from their US bank accounts into Mexican accounts He says Johnny what they're not telling you about that blacklist of banks is that they're popular with foreigners, too Lots and lots of gringles and expats are banking there Another thing they're not telling you is that the third institution targeted by US government Because it's been found to be laundering fentanyl and opioid money is called vector Casa de Bolsa So who cares no big deal, right? But what they're not telling you it's owned by a guy named Alfonso Roma Garza a Monterey, Mexico businessman who served as

[02:20] Mexico's past president Lopez Overdoors chief of staff so for all the naive innocence and puddin heads out there who say high-level Mexican government officials are not in bed with the money launderers and drug traffickers. I guess this story answers that question How can it turn out that the chief of staff of the ex-president Lopez Obrador owns the brokerage house that the US government Just put on the blacklist for laundering fentanyl money Maybe that news went international for a minute or two then faded away because people in the states don't really care But it's a hot topic among gringles here in Mexico, too, because we are disproportionately affected by this kind of stuff He says the first two institutions intercam and CI back

[03:07] Oh began as financial consulting and investment in foreign exchange services that eventually expanded into retail banking and catered to the needs of foreigners Expats and gringles particularly they've got thousands of gringles and expat clients particularly American and Canadian retirees with offices and tourist spots like San Miguel de Allende Chapala Porto Vallarta Los Cabos, etc. If you notice, they're all gringo tourist and retirement spots He says my friends who bank at intercam have had all their electronic transfers suspended and the local branches in San Miguel allende There are three of them by the way told customers They couldn't withdraw cash from their accounts until they knew more about the situation In fact, he says it's gotten so bad that Mexico's banking and securities commission the CNB V announced that afternoon

[03:57] It would be taken over the management of those three institutions to protect the depositors And by the end of the week, they said the transfers would be back online at least for the banking institution intercam Oh, and of course, CI Banco and intercam have both issued statements strongly denying the accusations of money laundering Yeah, right insert laugh track here Asserting there are many years of Mexican regulatory compliance Insert laugh track there too and assuring customers their deposits are safe Is third laugh track there as well However as Mexican bank and financial institution analyst company Vanda Felvie been browned told Reuters News Service They said this does not bode well for Mexican financial institutions because being cut off from the US financial system is a death blow

[04:49] And of course Mexican president shine bulb chimed in right away. She demands more evidence. She says from the US Saying there's no proof at all to these US government allegation Basically insinuating money laundering in Mexico. That's absurd Meanwhile all over the news feeds in Mexico. There are photos of receipts and transfers Coming from dubious Chinese companies For example one transfer of over two point one million dollars in payments Coming from the bank to Chinese companies that ship the precursor chemicals of fentanyl in Mexico Hmm two million dollars for fentanyl precursor. That's not too fishy Is it so even without deep digging into personal files reasonable grounds exist for concluding the banks removing money back and forth for the fentanyl business

[05:39] So auto poses this question which Mexican banks will be next This does affect nearly every Mexican financial institution You know word on the street is bank officials are running scared every last Mexican on the street knows Banks are involved in illicit transactions money laundering and tax evasion and of course fentanyl precursor chemical purchases from China Anyway, Otto says it's too soon to see how and when this will spread to other Mexican banks, obviously Mexican banks and their reputations have been damaged Finally Otto says with one and a half million Americans living in Mexico and probably at least half of those having bank accounts in Mexico The question is are you a US citizen customer at one of those three financial institutions? Even if you're not if you're lucky and you've been spared

[06:26] You better think long and hard about your bank because more dominoes will fall So Johnny just thought I'd check in with you from San Miguel de Allende one of the most expensive gringo havens in beautiful, Mexico What's your take Johnny? What would you do? Well Otto? Thanks for that And I don't know how long you've been listening, but I think you already know my take on living in Mexico Nice place to visit. I'd never want to live there So what are you supposed to do if you're living in Mexico? You're gonna have a bank in Mexico, especially if you're retiree You're probably getting your Social Security check direct deposited there or maybe company pension or some cash coming in from the states Whatever so then what happens if the US cuts off your bank and there's no more US dollar checks cashed No more wire transfers from a US bank to your bank in Mexico. That would include of course your Social Security check

[07:12] Hmm what to do what to do? Hey, how about this were a good idea and it's not new I've been talking about it for 10 years now. How about putting the majority of your wealth? Let's say 90% of it in Bitcoin or other crypto currency then guess what there's no third parties like a bank or wire transfers or the Swift system to depend on or pay fees to Along the way, of course If you're living in any foreign country, you're gonna need a bank account there However, I don't recommend you keep any large amounts of money and a Latin American bank not long-term anyway But of course if you're gonna make a big purchase like a car or a house or a piece of real estate You're gonna have to transfer money to your Latin American bank account To do the deal because the seller is gonna have a Latin bank account and expect to receive his funds there

[07:57] So if you're doing any kind of large transactions, you will have to do it through your Latin American bank So of course you will need an account in a local Latin American bank By the way, most astute gringles and expats use their Latin American bank sparingly like a sort of petty cash fund For one thing they never let it accumulate more than ten thousand dollars in any given month Why because according to FinCEN rules The bank has to send that information back to the US Treasury Department But only when your account pops up over ten thousand in any particular month So obviously smart gringles and expats never let it pop over 10k Most retired gringles and expats as a matter of fact get their Social security checks or pension checks direct deposited into their Latin American bank account

[08:44] And then they withdraw that money pretty much right away Either by going into the bank itself and drawing down on that account or using their debit or credit card to withdraw cash for For example, suppose you get a direct deposit from Social Security of two thousand bucks a month Most of those ATM machines affiliated with your own bank will let you pull out up to 500 bucks US a day And again, if you use your own bank's ATM machines There'll be no charge for pulling out dough if you use someone else's ATM machine You know a generic ATM machine in a shopping mall or something They'll usually charge a buck and a half or two bucks a transaction Anyway, that's what most smart astute expats do They draw down their bank accounts and only keep a thousand or two thousand bucks in there at the maximum at any given time

[09:31] So then where do they keep their mother load if they have one the big dough? Well, they're smart They're not keeping it in US dollars that's for sure because it's losing five or more percent a year due to inflation a Losing proposition all around that's something that most people with cash reserves Don't want to think about or talk about that just sitting on a big lump of cash is losing five percent or more a year That's the big point Michael Saylor always talks about with micro strategy How the US dollar loses about half of its purchasing power every 10 years? So then where do gringos and expats keep their mother load that nest egg if they have one well most smart gringos and expats I know have their dough and Bitcoin or crypto Bitcoin ETFs gold or silver and Or real estate, but not real estate in the US

[10:16] They usually have it in the Latin country where they have their plan B And of course some gringos and expats have a portion of their money in the US stock market Hopefully they haven't allocated too much of their dough there because you know, it's at all-time highs and what goes up must come down I know you're probably thinking well, then that should apply to Bitcoin too. Well, that's a different animal altogether But you knew that already right by the way as I'm doing this show today bitcoins had a hundred and eight thousand dollars If you think about it What that means is that 99% of all the people who have ever bought Bitcoin in their entire life. That means nearly every buyer Their bitcoins worth more than they paid for it. And if they bought very recently They're pretty much even Steven. Just remember at these prices almost no one's ever lost a cent

[11:03] Even people who bought at the all-time high, I think it was 110,000 even today at 108,000 in the greater scheme of things. They're just about breaking even of course This is not financial advice. I'm just giving opinion here though. I have to say about every single day I have someone asked me Johnny. What's your Bitcoin prediction for the end of the year for January 1st? 2026 well, I'm not clairvoyant, but people keep asking me over and over So I do give an answer as most of my friends know my predictions have mostly panned out Generally speaking, of course not day to day or even month to month I won't get specific with short-term predictions But my long-term predictions have been right in the ballpark if people ask me I will pick a number But I'll say don't hold me to it. So then what's my projection for Bitcoin around January 1st 2026?

[11:52] Well, like I said, don't hold me to it, but I'm fairly confident. It'll be around 150,000 again Don't hold me to it. But since you asked over the past 10 years in a general sense. I've been nailing it pretty good Right moving on speaking of tariffs. Were we speaking of tariffs? Well, here's an email from buddy He says Johnny I'm living in Ecuador and though I love the country itself and the people the government sucks Sometimes I think I made a bad decision But then I wake up and look at the sunrise take a long hike and say to myself I just know I'm gonna live a longer and healthier life as long as I don't have to go to the big city and see a parade of cops Protecting giant SUVs and traffic like you Johnny. I hate politicians they just love to put themselves on display and show how important they are and when they come running through your neighborhood blocking all traffic because they

[12:42] Can they make the little guy on the street who does the real work stop what he's doing and give away It just kills me when I see those useless politicians getting police Escorts through the city as if their shit doesn't sting yet They're so humble and of the people when they're running for office shaking hands kissing babies Claiming how they're one with you the little guy how they came from nothing to how they feel your pain Johnny I wish there was a button you could press and they all would just implode Just vaporize like a target in a video game that said Johnny I'll give you another couple of reasons why I can't stand Ecuador's government Did you know Ecuador's got a new tax a $20 fee on everything you import into the country? Of course that covers small low-value shipments from platforms like BMO Amazon shine Alibaba Target, etc

[13:30] Etc. No, Johnny It isn't a percentage tax but a flat tax on everything applied uniformly to every parcel regardless of origin or company Johnny I've heard you talk about other Latin American countries on how they deal with Parcels coming in from places like Amazon you get a $200 exception on imports You've mentioned that it works like that in a number of Latin American countries Well, we're not so lucky here in Ecuador It would be great if that was the case, but it's not there are no exemptions for small value purchases You pay 20 bucks on every parcel Whether it's B vitamins or zero fluoride toothpaste and I'm not talking about the shipping charges They're extra the $20 an item fee is a government tax with your shipping or courier service charge in addition on top of that At least the shipping companies providing a needed service

[14:18] I don't mind paying for that but that government charge pure theft alongside that and worse yet another reason to hate Ecuador's government is that they impose a foreign currency export tax a 5% charge on every dollar spent abroad that gets paid out of an Ecuadorian bank or credit card account So for example, let's say you buy something on Amazon. You're paying with a bank credit or debit card You're living in Ecuador. So it's an Ecuadorian bank Well, suppose you're buying a tube of non-fluoride toothpaste from Amazon. It's 10 bucks Remember, I just said there's a $20 fee on every imported package So suddenly it costs you 30 bucks shipping charge because it's under a pound probably 5 bucks Suddenly that $10 to but toothpaste is $35. Ah, but remember there's a 5% charge on dollars spent abroad

[15:09] When using Ecuadorian banks or credit cards issued from Ecuadorian banks So I get hit for another 5% which is applied even to imports from overseas platforms Oh, but the government says these measures are transparent non-discriminatory and aimed at preserving local industries and currency reserve I call bullshit on that that money goes directly in the government coffers and Lardest bureaucrats have their heads buried deep in that trough Meanwhile the Ecuadorian government's official line is that they have a sovereign right to regulate trade and protect their economy Meanwhile people hate Trump for his tariff funny how first world news feeds Rarely report on the tariffs other countries impose that affect American and everyone else's exports

[15:57] Signed buddy see an expat living in the highlands of Ecuador Alright, thanks for that buddy. Yep. You're right. Ecuador is a nice place to visit But I wouldn't want to live there Speaking of Latin American government taxes and how they try to squeeze blood from a turnip Something tells me that the Brazilians are finally getting rightfully pissed at their lying piece of shit socialist president Lula Again when I call him a shitbag I say that in the kindness most Christian sort of way And you know that scumbag Lula who by the way was convicted of corruption and served only part of his jail sentence After his first term as president Anyway, it looks like the election was rigged in his favor based on what I'm hearing from Brazilians now And how Lula's pardon came via the judges he appointed in his previous term

[16:45] so the judges he appointed got him sprung from jail and Rigged the election for his second run at the presidency all that aside It seems like Brazilians are getting rightly pissed at him now turns out just last week Brazil's Congress nullified a presidential decree pushed and passed by Lula aimed at imposing a financial transaction tag Just like what we were talking about before in Ecuador attacks on bank-to-bank wire transfers credit and debit card purchases, etc Anyway, Lula's congressional allies only managed 98 votes against 383 against in the lower house to maintain the existing tax on Transactions like foreign exchange and credit card by the way last time Brazilian president got shut down in Congress like that was back in the 90s

[17:34] So this was a big slap in the face for him now You longtime listeners have heard me say Brazil's a nice place to visit too But I wouldn't want to live there one of those reasons is that they tax the shit out of you That's why most people work in the underground economy so they don't have to suffer the heavy tax Brazil like Ecuador has a financial Transaction tax structure. It's complicated too and therefore has a huge government bureaucracy So what's a financial transaction tax? It's a tax on various types of financial transactions in Brazil including foreign exchange like bank-to-bank stuff Investments and credit the taxes levied at specific types of transactions For example, every single credit and debit card transaction has an additional surtax or financial transaction tax of point three eight percent

[18:20] For foreign exchange transactions, that's if you want to you know transfer money from the states to Brazil or from Europe to Brazil It's one point one percent on any amount of dough that lands in your Brazilian bank account from a foreign country Additionally once it lands in your account and you want to switch it to another currency They nail you with an exchange Transaction tax of point three percent over and above the value of the currency exchange transaction itself And here's the real killer if you pay with a credit card in a different currency than the Brazilian real Like for example buying something on Amazon in dollars with your Brazilian real credit card Of course, your bank will do the conversion and charge you a fee, but the government will get a piece, too

[19:07] They'll set a transaction tax rate of three point three eight percent Every time you switch out of the Brazilian real into another currency like the dollar whatever Question is do you want to live in a country that milks its citizens like that? Well, maybe you don't mind because you're living in the States or Canada where 50 to 60 percent of the dough you earn Goes to your government. I know I know most people don't want to hear that They don't want to believe it. They don't want to contemplate it But man those of us who voted with our feet, man, are we glad we did Thankfully, most of us don't move to places like Brazil Even Ecuador used to be a nice place to live the expat life That is until international living and Conde Nast traveler and all the expat rags started pumping it as the number one Retirement destination for gringos and expats. Yep They killed the goose that laid the golden egg just like they did with Costa Rica in the 90s

[19:56] But you knew that already right? Oh and as for Costa Rica If you've been listening to this show for any length of time You know already the government as well as the whole society is out to gouge the gringo That is the name of the game and you can hardly blame. I mean look gringos have invaded Costa Rica in a Big way jacked up the prices of everything sort of squeezed out a lot of traditional Latino culture And it's not that the Costa Ricans are pissed about it They just don't like the fact that gringos have invaded every sector of the society Just like homegrown citizens up in the United States Don't take kindly to the fact that Latinos have been invading and culturally shifted their communities, too Though I do really like what Arnold Schwarzenegger said on the view the other day The view what a terrible piece of shit that program is you got to watch that little 30-second clip

[20:42] He says look you ask my opinion about foreigners in the United States He says I came as a foreigner came legally and you know what he says you come here as a foreigner You're a guest like a guest in a house when you are invited to a person's house You make the bed you keep the bathroom clean you flush the toilet you tiptoe around When you leave you leave a place better off than when you got there and man those woke ass lives on that show Went crazy when he said that Because you know we all and they all know what's really happening you drive through any Latino neighborhood in the United States anybody Trash all over the place junk strewn around the yard houses and apartments falling apart or in disrepair You know the saying po folks have po habits. Well when they get to the US sneaking in or otherwise

[21:28] Latinos are notorious for cloning the old neighborhood the neighborhood They hated and escaped from and bring with them all the bad habits of the places they left They have no idea how much that rubs native gringos the wrong way. Hey, I like Arnie's movies But I'm not a big iron old fan when it comes to his politics Though I do agree with him a hundred percent when he says illegals in the US need to have their asses kicked out Because man, I'll tell you if you're a gringo and you overstay your visa in a Latin American country It's funny the Latin authorities are not actively looking to kick you out. They're actively looking to get some money out of you Finding gringos who overstay their visas is a big source of revenue for Latin countries And they don't want to see that go away and they justify finding us by saying look you overstay your visit You're illegally in the country. You're breaking a law you pay your fine, and we'll extend your visa man

[22:17] It's a huge revenue source for Latin governments In fact Latin American countries like the Dominican Republic are so addicted to the fines They place on gringos who overstay their visas well some decade in government had an even better idea and no longer Can you go to the DR for 90 days visa free if you're an American or Canadian? Turns out in most all other Latin American countries including Cuba if you're an American Canadian or European You're allowed to enter that country on a tourist visa. It's automatic for 90 days You stay one day over you pay a fine on the way out at the airport So if you're over a couple of days or a week you pay a little fine 20 maybe 30 bucks However the DR Dominican Republic has pulled a fast one a couple of years back They lowered that visa free time to 30 days so

[23:07] American comes into the Dominican Republic He thinks he's got a 90-day visa because we don't read what it says when they stamp your passport Most all North Americans believe if they go to Latin America they get an automatic 90-day visa well not quite Yes, I've seen gringo tourists eyes bug out when they're in the immigration exit line at the DR airport And they're told they have to pay a fine They're always sort of shocked when they realize it's not like that in any other Latin American country You should see look on those gringos faces when they have to go into another line and pay that fee man if you ask me That's bad PR leaves a sour taste in a person's mouth after he's had a nice vacation in the DR I mean look paying a fine of 50 or 100 bucks isn't gonna kill you It's just the fact that you instantly know it's not like any other Latin American country when your last memory of the country is getting gouged

[23:55] That's not nice. They've got this vacation resort package thing all locked up with millions of gringos visitors a year People love the place especially the resort side of the island Gringos will come down for a week or two or three end up liking it so much they stay on an extra month or so Then comes the gouge. Oops. You've overstayed your 30-day visa by 15 days. That'll be a hundred bucks Thank you very much. Have a nice trip home. Anyway, just thought you might like to know that Oh and speaking of horribly corrupt postulate elected officials and bureaucrats. Let's revisit Ecuador again the Ecuadorian court Resentenced former vice president glass to 13 more years in prison for stealing money meant for earthquake victim relief You longtime listeners know if I ran the world

[24:41] There would be term limits only two terms for each politician one term in office one term in jail You choose which one you want to serve first Anyway, you might like to know how this went because it is interesting former vice president George Glass Jorge Glass has been sentenced to 13 additional years in prison for mousse using stealing and embezzling public funds allocated to rebuild areas affected by the devastating 2016 earthquake also his good buddy Carlos Bernal the secretary of reconstruction following that earthquake Was also given a 13 year sentence Monday The court applied the maximum sentence possible in both cases Former vice president glass 55 years old is currently in prison for two prior corruption convictions

[25:27] Has been due for release in 2028, but the new sentence will extend his incarceration until 2041 so what about that embezzlement in stealing charge? Well the funds for the Reconstruction after that earthquake had been obtained by hiking in the country's VAT tax value-added or eva tax as well as from public and private disaster relief charity donations as well as NGOs Menjios, that's a pretty filthy term these days Anyway, the federal judge in this case said glass and Bernal both committed a best element and fraud by using funds earmarked for earthquake reconstruction and relief Benefiting instead friends and family members by the way former president Rafael Correa Who was also on the run and living in Switzerland right now? He's been indicted in absentia

[26:15] He says glass who was his vice president is obviously being singled out for political reasons. Mm-hmm Insert laugh track here, too by the way glass who served as vice president under Korea from 2013 to 2017 was Captured by authorities following a raid on the Mexican Embassy in Quito last year Where he tried to flee and claim asylum which led to the severing of diplomatic ties between Ecuador and Mexico Since as you probably know an embassy is considered foreign territory Property of the country that posted the embassy That's how Julian Assange was able to hide away in Ecuadorian Embassy in London so long So what do you think are all politicians lying pus bag pieces of shit? Well, yes, they are but the real problem is that the public has a very short memory they'll vote for anyone that gives them freebies and

[27:06] politicians will keep giving out free shit day and night as long as it's coming from the public coffers and not Pockets, but you know that already, right? Oops. Sorry. No time for that boots on the ground story But I'll get to it right away first thing next show which brings us to an interesting closing question Why is it that we are secretly happy when politicians die? Problem is not enough of them die slow and painful deaths and way too many of them die of old age just saying You've been listening to the expat files living in Latin America If you need some help with your own plan B We can schedule a one-on-one phone or Skype consult Just send me an email the expat files at gmail.com And if you want to get on the waiting list for my next week-long expat Insider seminar in Central America where you're guaranteed to get a two to five year head start on your plan B

[27:55] Send me an email the expat files at gmail.com. No spamos