Banks Laundering Drug Money Without Consequence

The cynic in me thinks the reason the United States has not assertively moved to legalize drugs1 is for this reason – large banks are making so much freaking money laundering drug money. The banks have many, many lobbyists in Congress, and have made it known they are opposed to changing the status quo. The politicians claim it is a moral issue, but we know they lie.

Nancy Reagan - Just Say Yo

We’ve all read damning accounts of the government saving banks from their risky subprime bets, but it turns out that the Wall Street privilege problem is far more deeply ingrained in the U.S. legal system than the simple bailouts witnessed in 2008. America’s largest banks can engage in flagrantly criminal activity on a massive scale and emerge almost completely unscathed. The latest sickening example comes from Wachovia Bank: Accused of laundering $380 billion in Mexican drug cartel money, the financial behemoth is expected to emerge with nothing more than a slap on the wrist thanks to an official government policy which protects megabanks from criminal charges.

Bloomberg’s Michael Smith has penned a devastating expose detailing Wachovia’s drug-money operations and the government’s twisted response. The bank was moving money behind literally tons of cocaine from violent drug cartels. It wasn’t an accident. Internal whistleblowers at Wachovia warned that the bank was laundering drug money, higher-ups at the bank actively looked the other way in order to score bigger profits, and the U.S. government is about to let everyone involved get off scott free. The bank will not be indicted, because it is official government policy not to prosecute megabanks. From Smith’s story:

No big U.S. bank . . . 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 . . . . Large banks are protected from indictments by a variant of the too-big-to-fail theory. Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets.

Wachovia was acquired by Wells Fargo in late 2008. The bank’s penalty for laundering over $380 billion in drug money is going to be a promise not to ever do it again, and a $160 million fine. The fine is so small that Wachovia will almost certainly turn a profit on its drug financing business after legal costs and penalties are taken into account.

(click to continue reading Wall Street Is Laundering Drug Money and Getting Away with It | Economy | AlterNet.)

Even if banks are not actively laundering the cartel money, they are storing it – the drug economy is easily in the trillions of dollars, and upper level drug cartel executives are not keeping their cash under their beds. Just imagine, if one drug dealer in a medium size U.S. city like Baltimore can clear a few million dollars a month, and illegal drugs are being dealt everywhere humans live, well, you do the math.

From Michael Smith’s article, a hint of the huge sums of money we are talking about

Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion [PDF – Exhibit A Factual Statement] 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.

(click to continue reading Banks Financing Mexico Gangs Admitted in Wells Fargo Deal – Bloomberg.)

See, that’s over $125,000,000,000 a year in just one bank! From one area of the drug economy! Not including Columbians, Jamaicans, Americans, Taliban, Triads, yadda yadda. I don’t know for certain, but this Wachovia case seems to only be discussing cocaine dollars, in other words, not including profits from heroin, cannabis, methamphetamine, ecstasy, and whatever else people buy to get high. All in all that is a seriously large number of dollars, untaxed, unregulated, unaccounted for. And for what? So that bankers and drug lords can live high on the hog, and addicts can die from adulterated street drugs?

No, the drug war continues because the status quo is making certain groups an almost unfathomable amount of profit.

  1. despite the will of the electorate []

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