Monday, July 19, 2010

Some crime seems to pay very well!

I'm fuming at a report that US banks have been effectively financing Mexican drug-smuggling cartels - and paying a relative pittance in fines when detected.

Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history -- a sum equal to one-third of Mexico’s current gross domestic product.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.

Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.

. . .

Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities from coast to coast, taking in about $39 billion in sales annually, according to the Justice Department.

Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year -- enough to cover health care for 30.9 million Americans -- in overburdened courts, prisons and hospitals and lost productivity, the department says.

“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.

“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.

Wachovia is just one of the U.S. and European banks that have been used for drug money laundering. For the past two decades, Latin American drug traffickers have gone to U.S. banks to cleanse their dirty cash, says Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit.

Miami-based American Express Bank International paid fines in both 1994 and 2007 after admitting it had failed to spot and report drug dealers laundering money through its accounts. Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.

There's more at the link.

Wachovia paid a fine of a mere $160 million for its crimes - after having handled $378.4 billion for the cartels! Would anyone care to bet that Wachovia made at least one-tenth of one percent profit on those transactions? If so, that would amount to an income of $378.4 million. Even after paying the fine, Wachovia would thus be left with almost $220 million that it otherwise wouldn't have earned. Where's the justice in that?

I'm sure Wachovia isn't alone in this, either. I'd love to know how much US banks are making on such illicit deals . . . and whether they can be stripped of every penny of such ill-gotten gains!



dave said...

Alternatively, we could end the failed policy known as the "War on (Some) Drugs" and tax those profits.

That wouldn't allow us to continue dictating policy to third-world countries, though.

DaddyBear said...

This is my surprised face!

Seriously, Dave is right. Take away the profit motive for smuggling and bring this commerce out into the light.

Banks will make money legally or illegally. Why don't the federal laws that take away the property of those who take part in drug laws apply here?

Anonymous said...

Why not put the Mexican and US governments in charge of the whole drug thing - it will never make a cent of profit again and the growers and makers will give in when they see the mounds of paperwork, the OSHA, EPA, FDA and other A regulations and forms. Not to mention the IRS . . . as one Mexican Border-area lawyer advised his client about the IRS "There are federales and then there are Federales!"