Hensley is a retired special agent for the U.S. Customs Service. During his tenure in Southern California, he oversaw "Operation Casablanca," the largest U.S. -led money laundering investigation. This is the edited transcript of an interview conducted in 2000.

I would say from the law enforcement standpoint, it's a war. But in terms of the support of a widespread war that you would fight, no. The resources aren't there. You're fighting skirmishes as opposed to a real war. You have to engage the populace. You have to engage law enforcement and government to fund and fully support a war, and we don't have that.

What did you think about the war when you first joined Customs?

The war looked winnable. We thought that the resources were going to be there. We had the esprit de corps. We were attacking. And we could see measurable progress in terms of drug dealers being arrested, loads being intercepted, and a full court press along the border.

And today?

Today, we have fewer resources aimed at drug trafficking than we did seven or eight year ago. There are actually fewer Customs special agents on the job now than there were in 1993. Oh, I think from the agent's standpoint, the inspector's standpoint, those people on the line fighting it, it is still the number one priority. But in terms of support, and increase of support, interdiction, that's all down. All those resources are down from where they were years ago.

When you started out, you say there was an esprit de corps. That's the era of Richard Nixon.

I can remember that period of time when the agents, those guys that were on the border, on the line, whether it was South Florida, Texas, California, wherever, the entire agency was focused and dedicated to intercepting drugs. And we had the full support of the agency. We had the full support of the Justice Department. And during that time period, that was the days of the Bureau of Narcotics and Customs, we fought the war together along with the state and locals. So we each had our own targets. Certainly we skirmished a little bit between ourselves. That's what people with proud egos do. But we made a lot of progress, and we took a lot of dope off the street, and we could see that we were winning, and the government was behind us.

And that ended?

That ended. In 1973 DEA was formed. The Customs Service effectively was taken out of the drug war for probably five years. And then about 1980 the drug war began again in earnest. Resources were pumped in. The number of agents drastically increased; we tripled the number of agents. The commissioner of Customs was a hard core law enforcement individual, Willie von Rabb. The whole focus of the agency was again dedicated to taking out drugs. And at this particular time we were changing focus, we were changing away from the original focus of heroin and marijuana, and focusing on cocaine, which was a resurgent drug at that time.

When did you realize that cocaine was really something to watch?

The earliest I remember was 1971-72. Of course in those days we thought that a load of 100 pounds was an absolutely astronomical amount. I can remember working convoy cases coming across the Texas border, going all the way to New York, with 40 and 50 pounds of cocaine. Those numbers, obviously by today's standards, are minuscule amounts, when we look at tons being dumped off boats in the Pacific Ocean, planeloads flying into Mexico, and the inside of tanker trucks or tank cars lined with cocaine.

What was it like working with Mexico?

I've been on that border for 30 years, off and on. And I've seen great progress in the law enforcement establishment in Mexico. But by and large, all along that border, over the years, I've seen on regular occasions, corruption. Low pay, low training, big dollars. And as the narcotics problem has gotten bigger, so have the dollars that go with it. And with big dollars come payoffs comes corruption. The United States is not immune from it either.

What do you mean?

Years ago, we never ever saw people go down behind payoffs from drug dealers. As the dollars have increased, the agencies have taken on a much higher level of vigilance looking at their own people. And unfortunately and sadly, I wouldn't say on a regular occasion, but now and then we end up arresting some of our own, because of the lure of big dollars is connected to drugs and drug smuggling.

But in Mexico, corruption was more complicated, and violent. What happened in 1991 in the Veracruz incident, when Customs and Mexican drug law enforcement officials attempted to intercept a drug transport plane?

I was the assistant commissioner of Customs, and in charge of all law enforcement for Customs during the 1990 to 1994 period. The aircraft was a large airplane. It tripped the radars, and our aircraft began tracking it from South America up towards Mexico. And at that particular time a Mexican attorney general 's police aircraft took off, along with a U.S. Customs Citation jet. So there were two planes in the air, one loaded with Mexican attorney general's federal police, and the other with U.S. Customs pilots who maintained FLIR aircraft, and FLIR is the Forward-Looking-Infrared Radar, which can track heat sources, even in the nighttime. So it was basically the eyes and ears of the operation, and the plane from the government of Mexico was the actual response and action aircraft.

The incident that occurred, that I became aware of, was that as the drug plane landed, the Mexico attorney general's plane came in not very long after it. As the plane came onto the ground, and the U.S. aircraft hovered, or circled above it, they began to note that there were cries of gunfire from the ground people over the radio. And on the FLIR tape and from the vision of the pilots, they reported to us that the Mexico agents were under fire. As the incident progressed, it was a long gunfight. One by one the Mexican drug agents from the government of Mexico were killed. The aircraft, hovering, or circling, the Customs aircraft, was able to record much of this. And it appeared that there were army vehicles, or what looked to be army vehicles, in the perimeter area around where this attack took place.

It was so violent that the pilot with the drug plane--excuse me, the Mexico attorney general's plane, which was several hundred yards away from where the action was occurring, was actually tracked down by the individuals on the ground and killed. The incident lasted probably close to two hours. From start to finish.

Who were the assassins?

It was actually army troops. Army troops in that sector who had been, we found out later, paid to protect that airstrip and that load coming into Mexico. And I think the point here is that corruption paid off one side, however these Mexico federal police agents gave their lives trying to intercept and interdict this load of drugs. I think that, of all the shocks I've had in my career, that was probably the biggest, that an entire military unit would be involved in protecting drug loads. And to the point that they would actually attack and murder Mexican federal drug police.

How did the Mexican government react?

I would say that, having become intimately involved in that particular investigation, I saw a lot of courage on the part of the then-deputy attorney general, and some of the high police officials, who pushed very hard to prosecute the individuals involved. And in fact the prosecution did occur, and the senior officers involved were convicted, which is the first time ever that senior officers in the Mexican army were convicted of an action like that.

Yet U.S. drug officials were still wary of working with Mexican law enforcement. When U.S. law enforcement conducted an undercover money laundering operation in Mexico, nobody south of the border knew a thing about it. What happened with Operation Casablanca?

Well, I think what happened initially in Casablanca was, the Mexican government was really not aware of what we were doing. We were critically aware that there might be leaks. We had guarded against leaks all along the system, and a decision was made in Washington to notify the Mexican government officially at really the very last minute. Obviously that was embarrassing to the Mexican government. The case went down successfully. And there was a hue and cry in Mexico about U.S. operations, about sovereignty. There were a lot of issues and finger pointing about who knew, when they knew, and what were these U.S. agents doing in Mexico.

Can you describe the operation?

Casablanca originally was targeted at Cali cartel brokers, currency brokers, people who were the contact people to launder money. As that investigation proceeded, we ended up working on the Juarez cartel people. The Cali cartel and the Juarez cartel had one thing in common: they collected a lot of money in the United States, and they didn't know what to do with all that cash. And they needed to move it back to where they could spend it in a clean traceless way. As we proceeded in that investigation, and in other investigations, I might add, we ended up with an undercover money laundering organization, set up to approach these people and to identify their sources of money in the United States. During that phase of the investigation, we legitimately stumbled into some bankers in Mexico. And the bankers actually asked us, hey, we know what's going on, so why don't you cut us in. So we ended up targeting the banks because they had approached us. And as we started with one bank, going to two banks, we actually were besieged, and I use that term guardedly, but we were besieged by bankers who heard from their friends that there were big profits to make. And as we proceeded, we ended up two bankers, four bankers, six, and the numbers just kept going up. And during that operation we laundered over $100 million of traffickers' money through those banks down into--ultimately most of it went to Colombia. And we would actually bring these people in the operation, and with undercover cameras, they would sit and brag and talk for hours about how much money they were going to make, and that they clearly knew it was drug money, and didn't care. As long as they didn't touch the drugs themselves, they didn't care. It was all about money, and it was all about lining their own pockets. It was probably the best lesson in greed you could see on television.

How did you collect the money and what did you do with it once you had it?

We actually did pickups in various manners. Some monies were brought to us. Others, we would meet couriers in parking lots. We would deposit some of the monies in the banks in the United States. And then we would move some of it electronically to the banks in Mexico. In other cases, we would actually move the bulk cash to a bank in Mexico. So there were various ways that the money was moved into Mexico in those banks.

U.S. Customs agents would drive the money into a Mexican bank? How did you do it?

Actually, the informant took money across the border, in at least one case that I know of. The majority was by electronic transfer. In some cases we used Caribbean banks that we had set up. And the money would move from Los Angeles to the Caribbean bank. From the Caribbean bank to Mexico, it would then either move back to the United States in converted form into Mexican bank drafts, and be deposited in various accounts that we stipulated, or it would move from those accounts, to other accounts sometimes offshore in the Caribbean. Or it could be transferred directly out of the Mexican bank to Colombia. And in some cases it would go not just to an individual bank account, but yet be laundered a second time in Colombia through a peso or currency exchange. So its identity became further remote.

It's hard to keep track. But I guess that's the point. But didn't the Mexican bankers become suspicious when you were able to move money through U.S. banks with such ease?

They didn't care as long as the money came to them. As long as they saw money coming to them across the border into those accounts, they only worried about money being transferred in. An electronic transfer from the United States was not something they worried about, because that part was legal.

They weren't worried about being arrested in Mexico?

They felt that they were immune from arrest. They bragged out they could control the system, that the banking laws were such that they didn't need to worry about them.

How different were Mexico's money laundering laws than the United States'?

I would say that Mexico is progressing along a path that I saw in the seventies in the United States. I remember the days when people would literally come into banks in South Florida with bushel baskets of soggy $50, $20 and $100 bills and put them in bank accounts, and no one called us. Our banking laws were pretty soft then. We have since strengthened them. The Mexicans are in the same boat. Their banking laws were pretty darn spongy. A lot of holes in them, a lot of places that you could do a lot of things with money, and now with the new banking laws that they have there, it's getting stricter, and they're in a progressive manner to control their system down there.

The former head of the DEA once said there's no one we can trust south of the border.

I don't agree with Tom Constantine. I think Tom Constantine is a great guy, but I don't agree with him on that point. It's been my experience in 30 years, having worked along that border or with the Mexican government at various times, they have a lot of problems with corruption, but they also have some very dedicated people who have sacrificed a lot to try to work with us. And I know they bear a lot of embarrassment when it comes to corruption being found in their government. They're a long way from making it perfect. But I think there has been progress, and I think there are honest people with a great deal of integrity working in their system.

Operation Casablanca touched off a firestorm of protest from Mexican officials, didn't it?

Because of that there was an agreement called the Brownsville Agreement between the governments of Mexico and the United States, and basically what it does is require prior notification in the majority of cases and incidents that we work that connects to Mexico. This is a great deal of restriction, because like all official agreements, there is a lot of process that goes into notifications, how governments are notified, who gets notified, what are the papers and documents that have to be sent to the embassies, et cetera. And those that work drug cases know that timeliness is everything, and in some cases, you can't work the case if you follow all those rules. Time is of the essence, you can't notify quickly enough to get the case done.

Hasn't that led to complaints from frontline drug enforcers who now say their hands are tied?

That's the rules. The rules are that before you can do anything that is even considered close to operational or intelligence gathering, you have to notify Mexico City. The procedures are in place, they've tried to streamline them, but it's still very cumbersome. And it's a regular process, I mean we're constantly having to notify. Because when you live and work on this border, people cross back and forth, it's like the tide coming in and the tide going out. People cross this border four and five and six times a day. And to go through formal notifications every time to track fast moving intelligence, it's literally impossible. It's very, very frustrating for the agents on the border to follow those procedures.

Sounds like we've declared war and then decided not to fight it.

As I've referred to before, we don't see this as a war. It's not an action. We're in skirmishes. And the support doesn't seem to be there like it should be.

So where in your estimation does drug enforcement, after 30 years, where is it on a scale of priorities in our relationship to Mexico for instance?

Well, I don't think it's number one, let me just put it that way. I think it's quite a ways down on the list. There are legitimate things that governments have to look at. But being a person who has been involved in drug enforcement literally my entire adult life, I think it should be way up on that list.

I've seen basically the peaks and valleys of the drug war. In the early seventies, in the Nixon administration, it was an all-out drug war, and we saw a lot of resources, and we saw a lot of progress. In fact, I think at one time we were congratulating ourselves that we had won the war along the U.S.-Mexican borders. And then we went into the valleys. And I can remember back into the middle-late seventies an actual adviser to the White House saying that cocaine was not really a drug we should worry about. And of course a mere three, four, five years later, it literally exploded on us. Now, the Cali cartel, the Medellin cartel, the murders of policemen in Cali and Medellin, the explosion of amounts of drugs, the amounts of money that were being seized in the United States in relation to the drugs, just exploded. And that was a period when we were really not vigilant, nor did we have that many people fighting drugs.

In the eighties, we had at least from our commissioner's standpoint, totally committed and focused on drugs. The administration was giving us new resources, airplanes, boats. Interdiction was the name of the game, and I felt, as others did, in the eighties, and into the early nineties, that we were making significant progress. We were actually, percentage-wise in terms of acres of cocaine being grown, we were seizing a significant amount, and arresting significant traffickers, major traffickers. That's when the focus of the federal government was taking out organizations and major traffickers. And we were hurting the organizations. And then as the nineties drew on, we've gone back into the valley again. And we're down in the valley and have not gone back up on the peak. But as we take these periods when we don't make full commitments to the drug war, the other side, if you want to call it the other side, gathers strength while we're sitting on the bench. And then it's even harder when we do gear up again.

Is there any light at the end of the tunnel?

Oh, I think agents would tell you, police officers would tell you, give us the resources and we can at least make a dent in the stuff. But we've got to have a consistent backing and a consistent direction, not a herky-jerky left and right movement. And direction and support is what they need out there. I don't think it's hopeless. It takes not just the police, not just the federal . . . .