Last week, a lowly secretary in a Mexico City district court was found to have a whopping 432 million pesos (about US$40 million) in one of his bank accounts alone. If you figure than only a low percentage of bank accounts is effectively scrutinized by authorities, you soon realize the awesome extent of corruption and money laundering that goes on.

True, internal corruption in the form of bribes, kickbacks and payoffs are one thing, while money laundering from drug traffic and terrorism financing is another, but both have to do with the financial system and the inefficiency of internal controls.

The banking system claims to have invested heavily in internal controls, with some of the largest institutions setting up compliance teams of as many as 50 people. Yet, the case of the courtroom clerk, which probably involves judges and other court officials, only illustrates the tip of the proverbial iceberg.

By some estimates from banks and regulators, as much as US$20 billion is laundered in Mexico by drug cartels each year. This has led to an aggressive effort, promoted by Washington, to pursue money-laundering cases against Mexican cartels. Regrettably, the drive appears to be inflicting only minor damage on the trafficking organizations, which have grown sensationally rich on drug profits from U.S. consumers.

This year, Treasury agents have begun to share with their Mexican counterparts financial data on drug kingpins that are gleaned from wiretaps, informants and cyberspace probes. The United States has now designated more than 300 people and 180 companies as significant narcotics traffickers, which freezes their U.S. assets and bans U.S. firms from doing business with them.

Although President Obama claims to be putting unprecedented pressure on cartels and their finances, the U.S.-Mexican effort has produced little in the way of arrests or seizures.

Over the past decade, a measly US$16 million tied to suspected Mexican traffickers has been blocked in the United States, or one dollar for every US$20,000 estimated by the Congressional Research Service to flow southward from the United States to organized-crime groups in Mexico each year.

The Mexican Attorney General’s Office (PGR) and other agencies gripe that the financial intelligence the United States shares with them is of little use, and that the information included in kingpin designations is unsupported by evidence that would allow Mexican courts to go after launderers.

But in Mexico, even when a well-documented laundering case does make it to court, the likelihood is that it will get nowhere due to hefty bribes and payoffs, as last week’s case well illustrates.

The legal differences are basically insurmountable. Under U.S. law, a designation can be based on reasonable belief’’ a low legal standard that could include, for example, a declaration from an anti-narcotics agent based on a tip from an informant. In Mexico, you must have three tons of documentary evidence to get the ball rolling.

In the mechanics of the effort, until recently, the U.S. Office of Foreign Assets Control alerted Mexican authorities that it was about to put someone on the kingpin list only a few days in advance a diplomatic nicety but meaningless in terms of helping the Mexicans make cases.

Treasury people acknowledge that the monies frozen are hardly significant, but say the kingpin lists serve to name and shame businesses and associates who help launder cash for the cartels.

Local authorities, who can hardly be regarded as bastions of efficiency, call this naive. When they name someone to the list, the people associated with this business quickly go underground, says a PGR official.

North of the border, there are also frustrations. Mexican laws make it far harder to freeze assets than U.S. regulations do. And while Mexico has passed laws limiting deposits and withdrawals in U.S. dollars from Mexican banks, efforts to reform Mexico’s money-laundering laws have stalled in Congress.

Actually, the only thing that the Mexican government’s limitations on dollar deposits has achieved is to inhibit tourism and border transactions, with a negligible impact on actual money laundering, according to business organizations.

Since bureaucrats will be bureaucrats, the two countries have recently made what U.S. officials describe as unprecedented efforts to work together. In view of the scarce results, the statement sounds like it came from one of those useless bilateral legislative get-togethers.

Adam Szubin, director of the Office of Foreign Assets Control in Washington, says his office is working collaboratively with the Mexicans, which is why I feel this is a moment of tremendous promise.

For his part, President Felipe Calderón asserts that to prosecute money laundering, you need really smart people, who know a lot about finance. At the same time they need to be very honest and very brave. So it’s not easy. The implication is that he doesn’t have those smart people.