Once a regional problem involving a customer base of a few million, and barely a billion dollars in sales, the illegal drug industry is now a worldwide enterprise with tens of millions of hard core consumers spending hundreds of billions on opiates, cocaine and amphetamines and marijuana, as well as other drugs.
The single largest marketplace for illegal drugs continues to be the United States. Although the market has decreased dramatically since its heyday in the mid-80's, close to thirteen million Americans still think nothing about occasionally buying a gram of cocaine, a few hits of ecstasy or a quarter ounce of weed to party with their friends on the weekends.
Imagine a typical weekend in New York City. Experts estimate that at least one percent of the population - 80,000 plus - spends $200 on illicit drugs. That alone would amount to $16 million dollars a week or $832 million a year. And that's just New York.
When the drug money ultimately makes its way into the foreign economy, it is used to pay the salaries of shippers and processors, as well as the bribes that supplement the incomes of government officials on both sides of the border. What keeps the drug industry going is its huge profit margins. Producing drugs is a very cheap process. Like any commodities business the closer you are to the source the cheaper the product.
Processed cocaine is available in Colombia for $1500 dollars per kilo and sold on the streets of America for as much as $66,000 a kilo (retail). The average drug trafficking organization, meaning from Medellin to the streets of New York, could afford to lose 90% of its profit and still be profitable," says Robert Stutman, a former DEA Agent. "Now think of the analogy. GM builds a million Chevrolets a year. Doesn't sell 900,000 of them and still comes out profitable. That is a hell of a business, man. That is the dope business."
Citigroup, JP Morgan Chase & Co., Wachovia (acquired by Wells Fargo in 2009), HSBC Holdings, ING Bank, Standard Chartered, American Express Bank International, Barclays, RBS, Coutts, UBS and not a few others, have a common bond beyond ranking among the largest banks in the world.
All have been accused within the past five years of failing to comply with US anti-money laundering laws — thereby enabling, collectively, hundreds of billions of dollars worth of suspicious transactions to move through the banking system absent adequate monitoring or oversight.
Imagine if you or I were pulled over by the police driving a 40ft container while transporting $800 million in used bills that traced back to drug cartels in Mexico and Columbia suspected of being involved in murder, kidnapping, extortion, prostitution and cocaine trafficking. What are the odds that we would walk away with only a slap on the wrist and a fine?
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| El Chapo HSBC Happy Customer |
But if you’re a big bank, and you’re caught moving money for a major international cartel, you don’t have to worry. You just fork over a monetary penalty, and then raise your fees to make up for it. Yet not one these banks, nor any of their top executives, has been hit with criminal sanctions. No one from the big banks ever goes to jail – These are the proceeds of murder and misery where in Mexico alone over 60,000 people have been killed over the past 6 years in drug related violence. But no one goes to jail.
How much money does a bank have to launder before people go to Prison?
Britain's biggest bank was forced to pay $1.9bn (£1.17bn) fine to settle allegations by US
regulators that it allowed itself to be used to launder billions of dollars for the Sinaloa drug cartel of chapo Guzman and Colombia's Norte del Valle cartel for nearly a decade until 2010.The US department of justice said HSBC had moved $881m for two drug cartels in Latin America and accepted $15bn in unexplained "bulk cash", across the bank's counters in Mexico, Russia and other countries. In some branches the boxes of cash being deposited were so big the tellers' windows had to be enlarged.
Specifically, the government says HSBC failed to monitor over $670 billion in wire transfers from HSBC’s Mexico division between 2006 and 2009 and failed to monitor over $9.4 billion in purchases of U.S. dollars from HSBC’s Mexico unit over the same period. (The Justice Department’s said HSBC’s Mexico division became the “preferred financial institution for drug cartels and money-launderers.”). The agency also adds that HSBC failed to monitor over $200 trillion in wire transfers between 2006 and 2009 from countries that HSBC’s U.S. unit deemed to be “standard” or “medium” risk.
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| Lord of War Happy HSBC Client |
There is a consensus among U.S. Congressional Investigators, former bankers and international banking experts that U.S. and European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by U.S. banks alone.Over a decade then, between $2.5 and $5 trillion criminal proceeds have been laundered by U.S. banks and circulated in the U.S. financial circuits. Senator Levin's statement however, only covers criminal proceeds, according to U.S. laws.
Wachovia was fined $50m and made to surrender $110m in proven drug profits, but was shown to have inadequately monitored a staggering $376bn through the Casa de Cambio over four years, of which $10bn was in cash. The whistleblower in the case, an Englishman working as an anti-money laundering officer in the bank's London office, Martin Woods, was disciplined for trying to alert his superiors, and won a settlement after bringing a claim for unfair dismissal.
Wachovia was not the first, neither will HSBC be the last. Six years ago, a subsidiary of
Barclays – Barclays Private Bank – was exposed as having been used to launder drug money
from Colombia through five accounts linked to the infamous Medellín cartel. By an ironic twist, Barclays continued to entertain the funds after British police had become involved after a tip-off, from HSBC.
And the issue is wider than drug-money. It is about where banks, law enforcement officers
and the regulators – and politics and society generally – want to draw the line between
the criminal and supposed "legal" economies, if there is one.
Take the top-drawer bank to the elite and Her Majesty the Queen, Coutts, part of the bailed-out Royal Bank of Scotland. On 23 March, the UK Financial Services Authority issued a final notice to Coutts, fixing a penalty of £8.75m for breach of its money-laundering code.
It wouldn't be much of a stretch to insist that drug money laundered by financial giants like HSBC and Wachovia were in fact, little more than “hedges” designed to offset losses in residential mortgage backed securities (RMBS), sliced and diced into toxic collateralised debt obligations, as the 2007-2008 global economic crisis cratered the capitalist “free market.” Evidence suggests that HSBC stepped up money laundering for their drug cartel clients as the hyper inflated real estate bubble collapsed.
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| Norte del Valle Cartel Drug Money |
Royal Bank of Scotland has been fined £5.6m by the Financial Services Authority for failing to adequately screen customers and payments to prevent its banks – RBS, NatWest, Ulster Bank and Coutts – from being used for money laundering.
Standard Chartered PLC agreed to pay $340 million to a New York regulator to settle allegations that the bank broke U.S. money-laundering laws. The bank, which earlier had contested much of the allegations, acknowledged the fine covers all the transactions that the New York regulator alleged were illegal. The bank will acknowledge misconduct related to the $250 billion in transactions.
Barclays, HSBC, NatWest, Royal Bank of Scotland and UBS – have been linked to money
laundering scam over which some corrupt Nigerian politicians were indicted. Barclays, HSBC and UBS are all members of the Wolfsberg Group, an international body set up in 2000 to try to improve global anti-money laundering procedures.
The Central Bank of Ireland has reprimanded and fined the Dublin-based life assurance arm of Swiss bank UBS after it failed to comply in a timely manner with anti money-laundering legislation introduced in 2010.that allows the bank to admit to wrongdoing and pay a fine without being criminally charged.
In the 1990s, Raul Salinas de Gortari, the brother of former Mexican President Carlos Salinas, tapped US-based Citibank to help transfer up to $100 million out of Mexico and into Swiss bank accounts. Although US authorities investigated the suspicious money movements, ultimately no charges were brought against Raul Salinas or Citibank — a Citigroup Inc. subsidiary. Again, in January 2010, Citigroup popped up on banking regulators’ radar, this time in Mexico, when a Mexican judge accused a half dozen casa de cambios (money transmitters) of laundering drug funds through various banks, including Citigroup’s Mexican subsidiary. Citigroup again, was not accused of violating any laws.
Like any cash rich business, drug trafficking organizations invest in the legitimate economy of their own country and use investment advisers in financial instruments available in the international marketplace. 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.
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 that 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.
If you're caught with a few grams of cocaine, the chances are good you're going to jail.
If it happens repeatedly, you may go to jail for the rest of your life, But evidently, if you launder nearly a billion dollars for drug cartels and violate international sanctions, your company
pays a fine and you go home and sleep in your own bed at night - every single individual
associated with this -Is there a problem with that picture?