U.S. Banks Help Cartels Launder Illegal Drug Money

By buseman · Jul 5, 2010 · Updated Jul 7, 2010 · ·
  1. buseman
    Wachovia bank recently reached an agreement with federal prosecutors to settle charges that it allowed drug cartels to launder more than $378 billion through exchange houses it owned in Mexico from 2004 to 2007.

    Wachovia, now owned by Wells Fargo, was found to have committed the largest violation of the Bank Secrecy Act in U.S.

    Wells Fargo has agreed to pay $160 million in fines and penalties, which represents less than 2% of its 2009 profits.

    If Wells Fargo does pay the amount agreed upon, the Justice Department will drop all related charges next March. According to Bloomberg News, No big U.S. bank--Wells Fargo included--has ever been indicted for violating the Bank Secrecy Act or any other federal law.

    Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

    Some of the laundered drug money was used to buy DC-9 planes to smuggle drugs into Mexico.

    But Wachovia wasn’t the only bank to allow illicit funds to move through its accounts. The aircraft purchases also relied on monies that moved through Bank of America.

    And American Express Bank International in Miami has twice been fined for failing to detect drug money filtering through its accounts.

    And it’s not just the banks that have profited from drug cartel money. In February, Western Union, which transfers money by wire, agreed to pay $94 million to settle investigations by Arizona’s attorney general.

    Monday, July 05, 2010

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  1. Alfa
    This makes little sense. So because a bank allows its customers to transfer money, they are criminal?
    Are suppliers of electricity criminals if they supply cannabis grow operations?
  2. dutch-marshal
    more info:

    Banks Financing Mexico Gangs Admitted in Wells Fargo Deal

    Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet. They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.
    The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.
    This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.
    The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

    full story and source:

  3. Terrapinzflyer
    The US has very strict "know your customer" laws. Essentially- especially when dealing with huge sums of money, the banks must do their due diligence of checking records to ensure that the money is legitimate. And any transaction in excess of 10,000USD automatically triggers stricter procedures.

    Oddly enough- their are also laws in place that allow the banks to keep the funds themselves if they narc out drug money. Obviously Wachovia saw the long term picture and knew they could clear much more money over the long haul...if they could get away with it...
  4. MrG
    As Terrapinz said, there are numerous, quite rigorous and well-defined, KYC and due-diligence procedures in place that banks are *supposed* to follow to prevent money-laundering. But, when it comes to profit, the shareholder is king and simple math will always win out, i.e. If the imposed financial penalty is smaller than the anticipated profit, which it usually is, no capitalist banker worth his braces (suspenders for you yanks), would turn down the chance to get a slice of a multi-billion dollar pie.

    Trying to stash a few hundred grand in cash of dubious origin? Chances are you'll trip the alarm bells unless you have a particularly solid method in place.

    Wanting to funnel billions of dollars through, supposedly, respectable banking institutions? Well sir, come this way, I'm sure we can also help you with a whole raft of financial products related to the purchase of large aircraft and the associated accoutrements needed for supplying your private army and greasing the wheels of commerce.

    There have been a multitude of these fines imposed on banks and financial institutions over the past few years, brought about simply in order for the financial regulator to agree to stop investigating the, (ahem) alleged, crimes. Mega-multi-million dollar fines agreed to by these companies, not because they have been charged and sentenced, mind you, but simply to have an investigation stopped. Then they get to claim that nothing has been proved (duh!), and that they will continue to rigorously enforce the appropriate regulations and will ensure, of course, that, if needed, working procedures will be modified to reduce the chance that these 'bad guys' will be able to take advantage of their honest and upright institution.
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