MEXICO CITY (IPS)�Mexican banks are not prepared to confront the laundering of money by drug traffickers and the volume of illegal funds flowing through the system is so great that a halt would break the country�s economy, say experts.

The latest inspections of banks in Mexico, conducted by the state-run National Banking and Securities Commission (CNBV), found that 73 percent of the records on the banking clients do not include information about the economic activities through which the account holders obtain their resources.

The CNBV also discovered that 87 percent of files do not contain a copy of the client�s signature, in 73 percent there is no evidence of collating documentation and in 26 percent there is no address listed for the titleholder.

The CNBV did not release the names of the banks investigated, though acknowledged that most did not meet the standards set four years ago here in an attempt to prevent money laundering.

On another front, a report by the Centre for National Security and Investigation, cited by researcher Carlos Loret de Mola in his book "El Negocio�� ("The Business,") indicates that the Mexican economy would plummet 63 percent if money from drug trafficking were eliminated.

Mr. Loret de Mola, whose book was published in July, said the few existing studies of money laundering in Mexico seem to agree that if this illegal activity were to disappear it would trigger an economic crisis worse than the one this nation suffered six years ago.

The 1995 financial disaster, the worst in Mexico in 50 years, erupted as a result of the devaluation of the nation�s currency in December 1994. Its repercussions on the rest of the world were dubbed "the tequila effect."

The information Mr. Loret de Mola gathered for his book, one of the few published that provides an in-depth look at the laundering of money coming from illegal dealings, shows that this activity represents anywhere from four to 20 percent of the nation�s gross domestic product.

Other studies indicate that $25 to $30 billion are laundered each year through the banks in Mexico, where four of the world�s major drug cartels operate.

Each of these criminal organizations spends $1 million a week to buy the silence of public officials, maintains the United States Drug Enforcement Administration.

The CNVB�s most recent investigations found 7,000 suspicious transactions that occurred since 1997, but has not yet been able to clarify the origins of those operations.

The Mexican Banking Association recognized that last year alone there may have been as many as 3,000 money laundering transactions in this country, which is ranked 14th in the world as far as greatest volume of this kind of illicit activity.

The CNBV, which this year applied 122 sanctions against banks for non-compliance with laws for battling money laundering, stresses that Mexico�s financial institutions must be better prepared for this fight and announced that it will increase its monitoring of the sector and will slap them with heavier fines.

Bank employees are unaware of proper procedure and there is a lack of automation in tracking suspicious financial movements, a CNBV representative told a seminar on prevention of money laundering held in September.

Meanwhile, the Attorney General�s Office calculates that the income of criminal organizations related to the drug trade stands at around $30 billion annually.

Most of Mexico�s commercial banking industry, which was in government hands from 1982 to 1993 and then returned to the private sector, now belongs to financial groups based in Britain, Canada, Portugal, Spain and the United States.

Investing in Mexico�s banking is good business for foreigners, said a report by the Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations regional agency.

The banking system, which the government saved from ruin in 1995 with an injection of funds, today is in full recovery, according to the Mexican Banking Association.

But some analysts point out that at least part of the improvement has occurred thanks to money coming from drug trafficking.