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Laundromat Banks Too Big To Fail

As a general rule, the most successful man in life is the man who has the best information.

Money laundering is the process by which illegally obtained cash is made to appear as if it has been obtained by legal means.

The following snippet is fromRobert Mazur's 'How to Halt the Terrorist Money Train' article that appeared in The New York Times:

"The House Subcommittee on Oversight, Investigations and Management issued a shocking report documenting the collaboration between Mexican and Colombian drug cartels and Hezbollah in narcotics and human trafficking, smuggling and financial crimes in the United States and Latin America -- a partnership that, in just the border region between Brazil, Paraguay and Argentina, produces an estimated $12 billion in cash each year.

Yet data from the Department of Justice Asset Forfeiture Fund and the United Nations Office on Drugs and Crime Research Report show that United States law enforcement tracks down and seizes no more than 1 percent of the drug fortunes generated each year by global cartels.

The rest isn't hiding in mattresses. It's being washed -- stripped clean of information that would identify its source, then transferred from one account to another, and often moved surreptitiously through various business enterprises, until it can settle safely in a criminal's private offshore bank account. None of this happens without help from bankers, lawyers and businessmen."

According to the U.S. Department of Justice the Sinaloa drug cartel, together with Columbian drug traffickers, the Norte del Valle Cartel, moved $881 million through HSBC between 2006 and 2010.

"The investigation further revealed that drug traffickers were depositing hundreds of thousands of dollars in bulk U.S. currency each day into HSBC Mexico accounts. In order to efficiently move this volume of cash through the teller windows at HSBC Mexico branches, drug traffickers designed specially shaped boxes that fit the precise dimensions of the teller windows. The drug traffickers would send numerous boxes filled with cash through the teller windows for deposit into HSBC Mexico accounts. After the cash was deposited in the accounts, peso brokers then wire transferred the U.S. dollars to various exporters located in New York City and other locations throughout the United States to purchase goods for Colombian businesses. The U.S. exporters then sent the goods directly to the businesses in Colombia." ~ U.S. Department of Justice

In violation of the Trading With the Enemy Act HSBC also used various schemes to move hundreds of millions of dollars to nations subject to trade sanctions. The list of nations included Iran, Cuba and the Sudan.

"On at least one occasion HSBC instructed a bank in Iran on how to format payment messages so that the transactions would not be blocked or rejected by the United States." ~ Assistant Attorney General Lanny A. Breuer

HBUS, the American affiliate of HSBC, repeatedly broke American Anti-Money Laundering (AML) laws. HBUS supplied the Saudi bank Al Rajhi with nearly US $1 billion, Al Rajhi used at the money to finance terrorist groups including Al-Qaeda.

"They violated every goddamn law in the book. They took every imaginable form of illegal and illicit business." ~ Jack Blum, an attorney and former Senate investigator regarding HSBC

Since 2006 more than a dozen banks have reached settlements with the Justice Department regarding violations related to money laundering including the following entities:

  • ING Bank
  • American Express Bank International
  • Union Bank of California
  • Lloyds
  • Credit Suisse
  • ABN Amro Holding (now owned by Royal Bank of Scotland)
  • Barclays
  • Standard Chartered.

All these banks admitted guilt and all were handed traffic tickets - please pay your fine on the way out the door.

"You know, if you're caught with an ounce of cocaine, the chances are good you're going to go 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 our international sanctions, your company pays a fine and you go home and sleep in your own bed at night." ~ U.S. Senator Elizabeth Warren

At one time Pablo Escobar's drug cartel controlled 80 percent of the world's cocaine trade. His recipe for success was: "You bribe someone here, you bribe someone there, and you pay a friendly banker to help you bring the money back."

Story Time

On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen. Inside the jet were 128 cases packed with 5.7 tons of cocaine, valued at $100m.

During an almost two year investigation by the DEA and the IRS it emerged that the smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of Wells Fargo.

The authorities uncovered billions of dollars in wire transfers, traveler's checks and cash shipments through Mexican exchanges into Wachovia accounts.

Criminal proceedings were brought against Wachovia but, even though it was the biggest action ever brought under the US bank secrecy act, the case never made it to court. In March 2010, Wachovia settled through the US district court in Miami and the bank is now in the clear.

A Lebanese bank accused of laundering drug money through U.S. banks and routing it to Hezbollah will pay $102 million to settle a 2011 lawsuit brought by the U.S. government.

The U.S. accused the Lebanese Canadian Bank (LCB) of using the U.S. banking system to launder proceeds from drug trafficking through West Africa and back to Lebanese financial institutions with ties to Hezbollah.

These cases are only the tip of the iceberg demonstrating the role the legal banking sector plays in laundering hundreds of billions of drug and terrorist dollars around their global tax payer bailed out operations.

Oh the irony

On 4 March 2013 HSBC announced profits of $20.6 billion in 2012 while it paid out a $3 million bonus to its CEO.

Late last year several HSBC customers told BBC Radio 4's MoneyBox program that when they attempted to withdraw certain sums, between £5,000 and £10,000, they were asked to provide proof why they needed the money.

How would you feel if a bank teller told you that you couldn't withdraw the amount of money you wanted from your account? What would your reaction be if he or she said "You can have $2,000.00 but you can't have $5,000.00."

What would your reaction be if the bank asked you why you needed your money, you were enough of a sheep to tell them, they said "Prove it, then you'll get your money."

"We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for.

The reason being we have an obligation to protect our customers, and to minimize the opportunity for financial crime." ~ HSBC

If you're a big bank moving money for a drug cartel or terrorist organization and get caught you pay a fine (HSBC paid $1.9b in fines and forfeitures - 10 percent of the pretax profits it earned in 2010) and then you up your fees.

Of course the perfect irony is the 'small guy' taxpayers are then the ones asked to provide proof as to why they need a couple of thousand dollars.


"Had the U.S. authorities decided to press criminal charges, HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized." Lanny Bauer, Assistant Attorney General

"In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor...Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." ~ Antonio Maria Costa, head of the UN Office on Drugs and Crime

'Too big to fail' means dealing drugs and funding terrorist groups is acceptable to our dear political leaders and their shadow puppet masters, the banksters.

This truth should be on all our radar screens. Is it on yours?

If not, it should be.


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