Money Laundering and The Drug Trade: The Role of the Banks

29 Oct
Mexico is in the grip of a murderous drug war that has killed over 150,000 people since 2006. It is one of the most violent countries on earth. This drug war is a product of the transnational drug trade which is worth up to $ 400 billion a year and accounts for about 8% of all international trade. The American government maintains that there is no alternative but to vigorously prosecute their zero tolerance policy of arresting drug users and their dealers. This has led to the incarceration of over 500,000 Americans. Meanwhile the flood of illegal drugs into America continues unabated. One thing the American government has not done is to prosecute the largest banks in the world for supporting the drug cartels by washing billions of dollars of their blood stained money. As Narco sphere journalist Bill Conroy has observed banks are ”where the money is” in the global drug war. HSBC, Western Union, Bank of America, JP Morgan Chase&Co, Citigroup, Wachovia amongst many others have allegedly failed to comply with American anti-money laundering (AML) laws. The Mexican drug cartels have caught the headlines again and again due to their murderous activities. The war between the different drug cartels and the war between the cartels and government security forces has spilled the blood of tens of thousands of innocent people. The drug cartels would find it much harder to profit from their murderous activity if they didn’t have too big to fail banks willing to wash their dirty money. In March 2010 Wachovia cut a deal with the US government which involved the bank being given fines of $ 160 million under a ”deferred prosecution” agreement. This was due to Wachovia’s heavy involvement in money laundering moving up to $ 378.4 billion over several years. Not one banker was prosecuted for illegal involvement in the drugs trade. Meanwhile small time drug dealers and users go to prison. If any member of the public is caught in possession of a few grammes of coke or heroin you can bet your bottom dollar they will be going down to serve some hard time. However, if you are a bankster caught laundering billions of dollars for some of the most murderous people on the planet you get off with a slap on the wrist in the form of some puny fine and a deferred prosecution deal. Charles A. Intriago, president of the Miami-based Association of Certified Financial Crime Specialists h as observed , “… If you’re an individual, and get caught, you get hammered. “But if you’re a big bank, and you’re caught moving money for a terrorist or drug dealer, you don’t have to worry. You just fork over a monetary penalty, and then raise your fees to make up for it. “Until we see bankers walking off in handcuffs to face charges in these cases, nothing is going to change,” Intriago adds. “These monetary penalties are just a cost of doing business to them, like paying for a new corporate jet.” This failure on the behalf of the US government to really crack down on the finances of the drug cartels extends to British banks as well. In July 2012 the US Senate Committee on Homeland Security and Governmental Affairs issued a 339 page report detailing an amazing catalogue of ”criminal ” behaviour by London based HSBC. This includes washing over $ 881 for the Mexican Sinaloa Cartel and for the Norte del Valle Cartel in Colombia. Besides this, HSBC affiliated banks such as HBUS repeatedly broke American AML laws by their long standing and severe AML deficiencies which allowed Saudi banks such as Al Rajhi to finance terrorist groups that included Al-Qaeda. HBUS the American affiliate of H SBC supplied Al Rajhi bank with nearly $ 1 billion in US dollars. Jack Blum an attorney and former Senate investigator has commented, “They violated every goddamn law in the book. They took every imaginable form of illegal and illicit business.” HSBC affiliate HBUS was repeatedly instructed to improve its anti-money laundering program. In 2003 the Federal Reserve Bank of New York took enforcement action that called upon HBUS to improve its anti-money laundering program. In September 2010 the Office of Comptroller of the Currency (OCC) sent a,”blistering supervisory letter” to HBUS listing numerous AML problems at the bank. In October 2010 this was followed up with the OCC issuing a cease and desist order requiring HBUS to improve its AML program a second time. Senator Carl Levin chairman of the Senate investigation into HSBC has commented that ,”HSBC’s Chief Compliance Officer and other senior executives in London knew what was going on, but allowed the deceptive conduct to continue.” Let us look at just a couple of the devastating findings in the Senate report . The main focus of the report is the multiple failures of HSBC to comply with AML laws and regulations: ”The identified problems included a once massive backlog of over 17,000 alertsidentifying possible suspicious activity that had yet to be reviewed; ineffective methods foridentifying suspicious activity; a failure to file timely Suspicious Activity Reports with U.S. law enforcement; … a 3-year failure by HBUS [a HSBC affiliate] , from mid-2006 to mid-2009, to conduct any AML monito

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