Monday, May 23, 2011

Onerous Dynamic Between US Banks and Mexican Drug Cartels

The vital role of U.S. banks in moving billions of dollars for Mexican drug cartels has largely been “undocumented.” But, Wachovia, Bank of America, HSBC, Citigroup, Bank of Credit and Commerce International, and American Express Bank International are all involved in money laundering. The Justice Department deals with these sorts of situations through the use of deferred-prosecution agreements and miniscule fines.

In a letter dated February 9 th , 2009, Mexican Finance Secretary Agustin Carstens makes the case to U.S. Treasury Secretary Timothy Geithner for automatic exchange of banking information between the two countries.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.” - Jeffrey Sloman, the federal prosecutor in charge of the Wachovia case,
The U.S. Treasury has recently proposed a rule known by insiders as the “Reporting on Non-Resident Alien Accounts” rule, which would require banks to provide the U.S. government with information on all non-U.S. person account holders similar to information provided by U.S. citizen/resident taxpayers on a 1099 form. (The U.S. government does not currently collect this information so they have no idea how much money is held in U.S. banks by foreigners, nor do they have any idea who those foreigners might be. This means that terrorists could be hiding their money in the U.S., and we could be missing a terror threat right under our noses.) You thought finding Osama bin Laden was hard? Imagine trying to track his and al-Qaeda’s money through shell companies, subsidiaries, and false names when U.S. banks don’t even know for whom law enforcement is looking, or worse, when U.S. banks are looking the other way and allowing criminal money to flow willfully through our financial system. The benefits of this new rule should be obvious – the U.S. will stop shooting itself in the foot when it comes to fighting terrorism and drug trafficking.


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