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    Drug Money-Laundering Bank Was Big Obama Donor


    AP

    BY: Washington Free Beacon Staff
    December 6, 2012 5:33 pm

    Europe’s largest bank, Hong Kong and Shanghai Banking Corporation (HSBC), is negotiating a settlement with U.S. federal prosecutors for violating anti-money laundering laws, according to Reuters.

    HSBC Holdings Plc might pay a fine of $1.8 billion as part of a settlement with US law-enforcement agencies over money-laundering lapses, according to several people familiar with the matter.

    The settlement with Europe’s biggest bank—which could be announced as soon as next week—will likely involve HSBC entering into a deferred prosecution agreement with federal prosecutors, said the sources, who spoke on condition of anonymity.

    President Barack Obama received more than $75,000 from HSBC during the 2008 and 2012 campaigns.

    HSBC was hardly blindsided by the probe. The bank set aside $1.5 billion last month in preparation for a similar fine owed to the Mexican government for related violations. The cost for breaching laws in America may be “significantly higher,” according to Chief Executive Stuart Gulliver.

    A July Senate Subcommittee report revealed that HSBC “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls.” Sen. Carl Levin (D., Mich.) was the subcommittee chairman who oversaw investigations:
    HSBC used its U.S. bank as a gateway into the U.S. financial system for some HSBC affiliates around the world to provide U.S. dollar services to clients while playing fast and loose with U.S. banking rules. Due to poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions. The bank’s federal bank regulator, the OCC, tolerated HSBC’s weak AML system for years. If an international bank won’t police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the U.S. bank being used to aid and abet that illicit money.


    Money-Laundering Bank Was Big Obama Donor | Washington Free Beacon


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    Super Moderator Newmexican's Avatar
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    So was it's predecessor, Wachovia.

    Whistleblower Who Blew the Lid Off the 2010 Multi-Million Dollar Wachovia Money Laundering Scandal Asks “Has Anything Changed”?


    Despite all of the talk about reform in banking procedures and compliance, little has changed in the industry. AML Services International LLC has gathered the foremost experts on the subject to analyze this issue in an upcoming seminar in New York.

    WEBWIRE – Thursday, June 14, 2012

    Thirteen years after the Bank of New York money laundering scandal, and two years after the largest anti-money laundering penalty ever imposed on a U.S. bank, questions of compliance attitude still loom. Martin Woods, who investigated bank officials of Bank of New York, and who blew the lid off the 2010 Wachovia money laundering scandal, believes that little has changed.

    “I investigated Bank of New York employees for the laundering of $10B of money of dubious Russian origin through the bank. That was 1999, so what has changed? I am not convinced there has been sufficient change in attitudes and culture at banks,” says Woods.

    Law-enforcement scrutiny is increasingly focused on narcotics proceeds moving between the U.S. and Mexico. Wachovia Bank (now Wells Fargo) received $160 million in money laundering penalties in 2010, the largest penalty ever obtained under federal anti money laundering laws. The bank acknowledged its failure to adequately monitor the billions of dollars it processed for Mexican currency-exchange houses between 2004 and 2007, a money flow including at least $110 million of narcotics proceeds from Mexican drug cartels. The bank escaped prosecution, and so far, no employees have been indicted.

    The lack of prosecutions of American financial institutions and senior management is frustrating. “Within the "Occupy" movement, perhaps we need a small group of former compliance officers who work to eliminate bad compliance practices,” he says.

    The $160M penalty against Wachovia was supposed to send a message to the financial institutions that compliance mistakes can be costly. But banks make too much money moving dirty money. "There is a great imbalance in the trillions of dollars banks earn by moving dirty money and the tiny part of that money that’s being paid in penalties" says Saskia Rietbroek, partner of www.nomoneylaundering.com.

    All these cases are connected. The Mexican money exchange houses, which were laundering money for the Mexican cartels, first banked with Union Bank of California. When this bank left the Mexican market because of regulatory pressure, Wachovia took over these clients. In just the three years, Wachovia processed $373 billion in wire transfers, $47 billion in checks and $4 billion in bulk cash deposits from the currency exchanges. When Wachovia left the Mexican market after receiving a $160M penalty for laundering, who took over the business? HSBC was Wachovia’s competitor in Mexico. HSBC was criticized in a 2010 enforcement action for having inadequate anti-money laundering controls in bulk cash and foreign correspondent banking. “The parallels with the Wachovia case appear to be striking,” says Rietbroek.

    Rietbroek further adds “Earlier this year, HSBC put a $1B reserve on its balance sheet for enforcement actions. That points to more than just “inadequate anti-money laundering policies and procedures”. That points to dirty money.”

    HSBC Holdings PLC is reported under investigation by a U.S. Senate panel in a money-laundering inquiry.

    “The money that Wachovia has admitted laundering came from Mexico, the drugs come from and through Mexico, the 50,000+ murders took place in Mexico. All of these things are connected, this is the big picture.” says Woods.

    Money laundering is not a victimless crime. The money people seek to launder through banks is connected to major crime, drug trafficking, people trafficking and murder. Our action or inaction can have a real impact upon the outcome.

    “I hope to teach people who work in compliance and want to do the right thing. I am not sure what it takes to change attitudes and cultures at big financial institutions. The Dodd Frank Act will lead to more changes and more instances of whistleblowing. Firms need to have an internal program which engenders the confidence of both employees and regulators. The public is fast running out of patience. The media has shown them the connections between the drugs, the guns, the murders and the laundering and they want action,” says Woods.

    Dennis Lormel, a former FBI agent, says: “The most surprising and troubling thing I realize is that the “tone at the top” in all these cases was not one of compliance. One would think that the marquee cases of the last few years would have changed that mind set. The still unfolding Wal-Mart case demonstrates the fracture between the business side of a major company and the compliance side. It also demonstrates that the business side trumps the compliance side.”

    Lormel, Woods and Rietbroek will be speaking at a www.nomoneylaundering.comSeminar in New York on June 21, featuring intense compliance training using real life enforcement cases including HSBC, Wachovia, Lebanese Canadian Bank, Wal-Mart corruption, critical AML trends, challenges of working as a compliance officer wanting to do the right thing, and detecting money laundering and terrorist financing.

    Our goal is to enhance the expertise, the ethics policies and operations and professionalism of people who work in anti-money laundering,” said Saskia Rietbroek, Partner at AML Services International.

    Whistleblower Who Blew the Lid Off the 2010 Multi-Million Dollar Wachovia Money Laundering Scandal Asks “Has Anything Changed”?

    Top recipients of campaign contributions from Wachovia, in 2008.

    From Open Secrets.org
    Top Recipients

    Chamber Member Amount
    Senate Obama, Barack (D-IL) $282,751
    Senate McCain, John (R-AZ) $199,663
    Senate Clinton, Hillary (D-NY) $109,250



  3. #3
    Super Moderator Newmexican's Avatar
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    Sounds like he UN was on board.
    Drug money saved banks in global crisis, claims UN advisor

    Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions


    The Observer
    , Saturday 12 December 2009

    Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

    Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

    This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "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," he said.

    Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

    "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." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

    "That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.
    The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.

    Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

    British bankers would want to see any evidence that Costa has to back his claims. A British Bankers' Association spokesman said: "We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks."
    http://www.guardian.co.uk/global/2009/dec/13/drug-money-banks-saved-un-cfief-claims


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    ADDED TO ALIPAC HOMEPAGE News with amended title ..

    http://www.alipac.us/content/drug-mo...ma-donor-1203/
    U.S. Constitution - Article IV, Section 4: GUARANTEES AMERICA FROM INVASION!

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    HSBC: TOO BIG TO JAIL



    by SYDNEY WILLIAMS 15 Dec 2012

    It is not often that I find myself in agreement with the editorial page of the New York Times, but I did on Wednesday. The Times criticized the $1.92 billion settlement agreed to by HSBC as “a dark day for the rule of law.” No bank executives, according to the LA Times, were charged. While $1.92 billion sounds like a lot, it is about 0.06% of the banks $2.6 trillion in assets. All banks stretch the limits and meaning of regulation. HSBC, the world’s third largest bank, and one that has been frequently warned, has simply been the most egregious. Without the rule of law, civil society devolves into either totalitarianism or anarchy.

    The problem is not just the fact that no one at HSBC was jailed for criminal activities that make Jessie James, Willie Sutton and Bernie Madoff look like amateurs; it is that there seems to be collusion between the bad guys (the big banks) and government. The government imposes fines, which appear steep but are manageable, payable to the agencies charged with monitoring their behavior. It is symbiotic, crony capitalism. Banks simply look at fines as a regular cost of doing business. Agencies view them as a source of revenues. It is the public, the bank’s customers and shareholders who bear the cost. Society’s moral fiber becomes weakened.

    What HSBC did was knowingly launder money for drug cartels in Mexico and Colombia, and provide banking services for countries known to harbor terrorists and for exporting terrorism. Both are in contradiction with stated American policy, but more importantly, both violate common rules of humanity. Mexican drug lords are not known for their niceties. According to the current issue of the Economist, 60,000 Mexicans, including 60 mayors, have been killed in the past six years. Bloomberg reports that the cartels used cash boxes precisely the dimensions of “tellers’ windows in HSBC’s Mexican branches.” Colombian narcotics dealers sell drugs in the U.S and then send the funds to Mexican banks to be converted into Colombian pesos. Additionally, the bank has provided banking services for countries like Cuba, Iran, Libya and Sudan. Stuart Gulliver, CEO of HSBC, in paying the fine and accepting responsibility, said “We are profoundly sorry” for what his bank did. Really?

    American officials said that they were fearful of imposing punishment so severe that a bank could be destroyed in the process. Fed officials have little concern about smaller banks and the hedge fund industry, which they persist in trying to topple. But big banks remain in a class by themselves. Senator Carl Levin (D-MI) praised the settlement saying that it sends a “powerful wake-up call to multinational banks about the consequences of disregarding their anti-money-laundering obligations.” I suspect the real message is get big enough and you won’t have to worry. It seems beyond credibility that executives who so blatantly violated federal laws should be allowed to go free. While HSBC stock, at $51.68, remains below its all-time high price of $99.52 set in October 2007, it is up 36% year-to-date – not too shabby.

    Despite the reluctance of the federal government to prosecute executives of very large banks who have violated more laws than Willie Sutton, we are living, according to the New York Times, in “the era of the star prosecutor in white-collar crime.” The paper noted that Preet Bharara, U. S. Attorney for Manhattan, was on the cover of Time magazine and got a shout-out from Bruce Springsteen during a recent concert, because of his decision to go after hedge funds for “insider trading.”Certainly trading on inside information is wrong and deserves punishment, but in a world in which information flows like the Mississippi it is difficult to determine what is right and what is wrong. The real reason the Bharara’s of the world go after hedge fund managers is because of the widely spread notoriety of their incomes, which, admittedly, seem excessive at a time of persistent high unemployment. However, their incomes are paid by sophisticated investors. Nevertheless, even if their crimes prove true, their actions pale in comparison to the practices of banks like HSBC. The bank laundered $881 million from drug cartels like Sinaloa in Mexico and Norte del Valle in Colombia. Thousands of deaths have resulted from these cartels and millions of Americans have suffered the consequences of their products.
    The same bank violated sanctions imposed against regimes by our government. The sanctions were meant to contain terrorist activity. Are not these crimes far more damaging to our society than those highly publicized investigations into the possibility that some hedge funds traded on information that may or may not have been received legitimately?

    What message about our society does all this send to our children and to all those who strive to play by the rules? You can escape punishment if you become an executive at a bank “too big to fail and jail,” As a prosecutor, you get shout-outs from rock stars if you indict a well known hedge fund manager, even if his innocent. If, as a hedge fund manager, you achieve enormous financial success you are automatically deemed a piranha to society, and thus a target for an over-eager prosecutor looking to add another notch to his holster. Firms too small to defend themselves are deemed small enough to fail and jail. It is a rotten message, but unfortunately one that captures the spirit of the downward spiral of our culture.

    HSBC: Too Big to Jail


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    Senior Member AirborneSapper7's Avatar
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    Too Big to Indict

    Published: December 11, 2012
    406 Comments


    It is a dark day for the rule of law. Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system. They also have not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

    Clearly, the government has bought into the notion that too big to fail is too big to jail. When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished. The deterrence that comes from the threat of criminal prosecution is weakened, if not lost.

    In the HSBC case, prosecutors may want the public to focus on the $1.92 billion settlement, which includes forfeiture of $1.26 billion and other penalties, as well as requirements to improve its internal controls and submit to the oversight of an outside monitor for the next five years. But even large financial settlements are small compared with the size of international major banks. More important, once criminal sanctions are considered off limits, penalties and forfeitures become just another cost of doing business, a risk factor to consider on the road to profits.

    There is no doubt that the wrongdoing at HSBC was serious and pervasive. Several foreign banks have been fined in recent years for flouting United States sanctions against transferring money through American subsidiaries on behalf of clients in countries like Iran, Sudan and Cuba. HSBC’s actions were even more egregious.

    According to several law enforcement officials with knowledge of the inquiry, prosecutors found that, for years, HSBC had also moved tainted money from Mexican drug cartels and Saudi banks with ties to terrorist groups.

    Those findings echo those of a Congressional report, issued in July, which said that between 2001 and 2010, HSBC exposed the American “financial system to money laundering and terrorist financing risks.” Prosecutors and Congressional investigators were also alarmed by indications that senior HSBC officials might have been complicit in the illegal activity and that the bank did not tighten its lax controls against money laundering even after repeated urgings from federal officials.

    Yet government officials will argue that it is counterproductive to levy punishment so severe that a bank could be destroyed in the process. That may be true as far as it goes. But if banks operating at the center of the global economy cannot be held fully accountable, the solution is to reduce their size by breaking them up and restricting their activities — not shield them and their leaders from prosecution for illegal activities.

    A version of this editorial appeared in print on December 12, 2012, on page A38 of the New York edition with the headline: Too Big to Indict.

    http://www.nytimes.com/2012/12/12/op...dict.html?_r=1&
    Amnesty for 11 million will increase debt by $6.3 trillion And that doesn't count costs of 22 million additional legal immigrants in just 10 years!
    A Nation of of 3rd World Broke A@@es "AmeriKa" cannot afford an Invasion of Broke A@@es from the 3rd World

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    Senior Member AirborneSapper7's Avatar
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    Under Obama's Pay Re-election off Money Pay Off system you only go to prison if you are a Serf

    The Gulag Ameripelago: US Incarceration Surpasses Russia's: 1 BIG Gulag prison colony

    HSBC on the other hand as purchased their freedom with other peoples money

    account holders

    so basically Obama gave them a get out of jail free card for a financial pay-off

    you used to go to prison for this... the Money Laundering and Bribary as well as excepting the bribes

    if you are a plebe / Serf ... your ass is going Bye Bye
    Amnesty for 11 million will increase debt by $6.3 trillion And that doesn't count costs of 22 million additional legal immigrants in just 10 years!
    A Nation of of 3rd World Broke A@@es "AmeriKa" cannot afford an Invasion of Broke A@@es from the 3rd World

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    Senior Member AirborneSapper7's Avatar
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    Amnesty for 11 million will increase debt by $6.3 trillion And that doesn't count costs of 22 million additional legal immigrants in just 10 years!
    A Nation of of 3rd World Broke A@@es "AmeriKa" cannot afford an Invasion of Broke A@@es from the 3rd World

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    Senior Member AirborneSapper7's Avatar
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    Amnesty for 11 million will increase debt by $6.3 trillion And that doesn't count costs of 22 million additional legal immigrants in just 10 years!
    A Nation of of 3rd World Broke A@@es "AmeriKa" cannot afford an Invasion of Broke A@@es from the 3rd World

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    Senior Member AirborneSapper7's Avatar
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    How a big US bank laundered billions from Mexico's murderous drug gangs

    As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

    Ed Vulliamy
    The Observer, Saturday 2 April 2011
    Jump to comments (243)

    A soldier guards marijuana that is being incinerated in Tijuana, Mexico. Photograph: Guillermo Arias/AP


    On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting. Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7 tons of cocaine, valued at $100m. But something else – more important and far-reaching – was discovered in the paper trail behind the purchase of the plane by the Sinaloa narco-trafficking cartel.

    During a 22-month investigation by agents from the US Drug Enforcement Administration, the Internal Revenue Service and others, it emerged that the cocaine smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of the giant Wells Fargo.
    The authorities uncovered billions of dollars in wire transfers, traveller's cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.

    Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year's "deferred prosecution" has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.

    More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico's gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.
    "Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations," said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank's $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.

    The conclusion to the case was only the tip of an iceberg, demonstrating the role of the "legal" banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.

    At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were "the only liquid investment capital" available to banks on the brink of collapse. "Inter-bank loans were funded by money that originated from the drugs trade," he said. "There were signs that some banks were rescued that way."

    Wachovia was acquired by Wells Fargo during the 2008 crash, just as Wells Fargo became a beneficiary of $25bn in taxpayers' money. Wachovia's prosecutors were clear, however, that there was no suggestion Wells Fargo had behaved improperly; it had co-operated fully with the investigation. Mexico is the US's third largest international trading partner and Wachovia was understandably interested in this volume of legitimate trade.

    José Luis Marmolejo, who prosecuted those running one of the casas de cambio at the Mexican end, said: "Wachovia handled all the transfers. They never reported any as suspicious."

    "As early as 2004, Wachovia understood the risk," the bank admitted in the statement of settlement with the federal government, but, "despite these warnings, Wachovia remained in the business". There is, of course, the legitimate use of CDCs as a way into the Hispanic market. In 2005 the World Bank said that Mexico was receiving $8.1bn in remittances.

    During research into the Wachovia Mexican case, the Observer obtained documents previously provided to financial regulators. It emerged that the alarm that was ignored came from, among other places, London, as a result of the diligence of one of the most important whistleblowers of our time. A man who, in a series of interviews with the Observer, adds detail to the documents, laying bare the story of how Wachovia was at the centre of one of the world's biggest money-laundering operations.

    Martin Woods, a Liverpudlian in his mid-40s, joined the London office of Wachovia Bank in February 2005 as a senior anti-money laundering officer. He had previously served with the Metropolitan police drug squad. As a detective he joined the money-laundering investigation team of the National Crime Squad, where he worked on the British end of the Bank of New York money-laundering scandal in the late 1990s.

    Woods talks like a police officer – in the best sense of the word: punctilious, exact, with a roguish humour, but moral at the core. He was an ideal appointment for any bank eager to operate a diligent and effective risk management policy against the lucrative scourge of high finance: laundering, knowing or otherwise, the vast proceeds of criminality, tax-evasion, and dealing in arms and drugs.

    Woods had a police officer's eye and a police officer's instincts – not those of a banker. And this influenced not only his methods, but his mentality. "I think that a lot of things matter more than money – and that marks you out in a culture which appears to prevail in many of the banks in the world," he says.

    Woods was set apart by his modus operandi. His speciality, he explains, was his application of a "know your client", or KYC, policing strategy to identifying dirty money. "KYC is a fundamental approach to anti-money laundering, going after tax evasion or counter-terrorist financing. Who are your clients? Is the documentation right? Good, responsible banking involved always knowing your customer and it still does."

    When he looked at Wachovia, the first thing Woods noticed was a deficiency in KYC information. And among his first reports to his superiors at the bank's headquarters in Charlotte, North Carolina, were observations on a shortfall in KYC at Wachovia's operation in London, which he set about correcting, while at the same time implementing what was known as an enhanced transaction monitoring programme, gathering more information on clients whose money came through the bank's offices in the City, in sterling or euros. By August 2006, Woods had identified a number of suspicious transactions relating to casas de cambio customers in Mexico.

    Primarily, these involved deposits of traveller's cheques in euros. They had sequential numbers and deposited larger amounts of money than any innocent travelling person would need, with inadequate or no KYC information on them and what seemed to a trained eye to be dubious signatures. "It was basic work," he says. "They didn't answer the obvious questions: 'Is the transaction real, or does it look synthetic? Does the traveller's cheque meet the protocols? Is it all there, and if not, why not?'"

    Woods discussed the matter with Wachovia's global head of anti-money laundering for correspondent banking, who believed the cheques could signify tax evasion. He then undertook what banks call a "look back" at previous transactions and saw fit to submit a series of SARs, or suspicious activity reports, to the authorities in the UK and his superiors in Charlotte, urging the blocking of named parties and large series of sequentially numbered traveller's cheques from Mexico. He issued a number of SARs in 2006, of which 50 related to the casas de cambio in Mexico. To his amazement, the response from Wachovia's Miami office, the centre for Latin American business, was anything but supportive – he felt it was quite the reverse.

    As it turned out, however, Woods was on the right track. Wachovia's business in Mexico was coming under closer and closer scrutiny by US federal law enforcement. Wachovia was issued with a number of subpoenas for information on its Mexican operation. Woods has subsequently been informed that Wachovia had six or seven thousand subpoenas. He says this was "An absurd number. So at what point does someone at the highest level not get the feeling that something is very, very wrong?"

    In April and May 2007, Wachovia – as a result of increasing interest and pressure from the US attorney's office – began to close its relationship with some of the casas de cambio. But rather than launch an internal investigation into Woods's alerts over Mexico, Woods claims Wachovia hung its own money-laundering expert out to dry.

    The records show that during 2007 Woods "continued to submit more SARs related to the casas de cambio".


    In July 2007, all of Wachovia's remaining 10 Mexican casa de cambio clients operating through London suddenly stopped doing so. Later in 2007, after the investigation of Wachovia was reported in the US financial media, the bank decided to end its remaining relationships with the Mexican casas de cambio globally. By this time, Woods says, he found his personal situation within the bank untenable; while the bank acted on one level to protect itself from the federal investigation into its shortcomings, on another, it rounded on the man who had been among the first to spot them.

    On 16 June Woods was told by Wachovia's head of compliance that his latest SAR need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia.

    Woods's life went into freefall. He went to hospital with a prolapsed disc, reported sick and was told by the bank that he not done so in the appropriate manner, as directed by the employees' handbook. He was off work for three weeks, returning in August 2007 to find a letter from the bank's compliance managing director, which was unrelenting in its tone and words of warning.

    The letter addressed itself to what the manager called "specific examples of your failure to perform at an acceptable standard". Woods, on the edge of a breakdown, was put on sick leave by his GP; he was later given psychiatric treatment, enrolled on a stress management course and put on medication.

    Late in 2007, Woods attended a function at Scotland Yard where colleagues from the US were being entertained. There, he sought out a representative of the Drug Enforcement Administration and told him about the casas de cambio, the SARs and his employer's reaction. The Federal Reserve and officials of the office of comptroller of currency in Washington DC then "spent a lot of time examining the SARs" that had been sent by Woods to Charlotte from London.

    "They got back in touch with me a while afterwards and we began to put the pieces of the jigsaw together," says Woods. What they found was – as Costa says – the tip of the iceberg of what was happening to drug money in the banking industry, but at least it was visible and it had a name: Wachovia.

    In June 2005, the DEA, the criminal division of the Internal Revenue Service and the US attorney's office in southern Florida began investigating wire transfers from Mexico to the US. They were traced back to correspondent bank accounts held by casas de cambio at Wachovia. The CDC accounts were supervised and managed by a business unit of Wachovia in the bank's Miami offices.

    "Through CDCs," said the court document, "persons in Mexico can use hard currency and … wire transfer the value of that currency to US bank accounts to purchase items in the United States or other countries. The nature of the CDC business allows money launderers the opportunity to move drug dollars that are in Mexico into CDCs and ultimately into the US banking system.

    "On numerous occasions," say the court papers, "monies were deposited into a CDC by a drug-trafficking organisation. Using false identities, the CDC then wired that money through its Wachovia correspondent bank accounts for the purchase of airplanes for drug-trafficking organisations." The court settlement of 2010 would detail that "nearly $13m went through correspondent bank accounts at Wachovia for the purchase of aircraft to be used in the illegal narcotics trade. From these aircraft, more than 20,000kg of cocaine were seized."

    All this occurred despite the fact that Wachovia's office was in Miami, designated by the US government as a "high-intensity money laundering and related financial crime area", and a "high-intensity drug trafficking area". Since the drug cartel war began in 2005, Mexico had been designated a high-risk source of money laundering.
    "As early as 2004," the court settlement would read, "Wachovia understood the risk that was associated with doing business with the Mexican CDCs. Wachovia was aware of the general industry warnings. As early as July 2005, Wachovia was aware that other large US banks were exiting the CDC business based on [anti-money laundering] concerns … despite these warnings, Wachovia remained in business."

    On 16 March 2010, Douglas Edwards, senior vice-president of Wachovia Bank, put his signature to page 10 of a 25-page settlement, in which the bank admitted its role as outlined by the prosecutors. On page 11, he signed again, as senior vice-president of Wells Fargo. The documents show Wachovia providing three services to 22 CDCs in Mexico: wire transfers, a "bulk cash service" and a "pouch deposit service", to accept "deposit items drawn on US banks, eg cheques and traveller's cheques", as spotted by Woods.

    "For the time period of 1 May 2004 through 31 May 2007, Wachovia processed at least $$373.6bn in CDCs, $4.7bn in bulk cash" – a total of more than $378.3bn, a sum that dwarfs the budgets debated by US state and UK local authorities to provide services to citizens.

    The document gives a fascinating insight into how the laundering of drug money works. It details how investigators "found readily identifiable evidence of red flags of large-scale money laundering". There were "structured wire transfers" whereby "it was commonplace in the CDC accounts for round-number wire transfers to be made on the same day or in close succession, by the same wire senders, for the … same account".

    Over two days, 10 wire transfers by four individuals "went though Wachovia for deposit into an aircraft broker's account. All of the transfers were in round numbers. None of the individuals of business that wired money had any connection to the aircraft or the entity that allegedly owned the aircraft. The investigation has further revealed that the identities of the individuals who sent the money were false and that the business was a shell entity. That plane was subsequently seized with approximately 2,000kg of cocaine on board."

    Many of the sequentially numbered traveller's cheques, of the kind dealt with by Woods, contained "unusual markings" or "lacked any legible signature". Also, "many of the CDCs that used Wachovia's bulk cash service sent significantly more cash to Wachovia than what Wachovia had expected. More specifically, many of the CDCs exceeded their monthly activity by at least 50%."

    Recognising these "red flags", the US attorney's office in Miami, the IRS and the DEA began investigating Wachovia, later joined by FinCEN, one of the US Treasury's agencies to fight money laundering, while the office of the comptroller of the currency carried out a parallel investigation. The violations they found were, says the document, "serious and systemic and allowed certain Wachovia customers to launder millions of dollars of proceeds from the sale of illegal narcotics through Wachovia accounts over an extended time period. The investigation has identified that at least $110m in drug proceeds were funnelled through the CDC accounts held at Wachovia."

    The settlement concludes by discussing Wachovia's "considerable co-operation and remedial actions" since the prosecution was initiated, after the bank was bought by Wells Fargo. "In consideration of Wachovia's remedial actions," concludes the prosecutor, "the United States shall recommend to the court … that prosecution of Wachovia on the information filed … be deferred for a period of 12 months."

    But while the federal prosecution proceeded, Woods had remained out in the cold. On Christmas Eve 2008, his lawyers filed tribunal proceedings against Wachovia for bullying and detrimental treatment of a whistleblower. The case was settled in May 2009, by which time Woods felt as though he was "the most toxic person in the bank". Wachovia agreed to pay an undisclosed amount, in return for which Woods left the bank and said he would not make public the terms of the settlement.

    After years of tribulation, Woods was finally formally vindicated, though not by Wachovia: a letter arrived from John Dugan, the comptroller of the currency in Washington DC, dated 19 March 2010 – three days after the settlement in Miami. Dugan said he was "writing to personally recognise and express my appreciation for the role you played in the actions brought against Wachovia Bank for violations of the bank secrecy act … Not only did the information that you provided facilitate our investigation, but you demonstrated great personal courage and integrity by speaking up. Without the efforts of individuals like you, actions such as the one taken against Wachovia would not be possible."

    The so-called "deferred prosecution" detailed in the Miami document is a form of probation whereby if the bank abides by the law for a year, charges are dropped. So this March the bank was in the clear. The week that the deferred prosecution expired, a spokeswoman for Wells Fargo said the parent bank had no comment to make on the documentation pertaining to Woods's case, or his allegations. She added that there was no comment on Sloman's remarks to the court; a provision in the settlement stipulated Wachovia was not allowed to issue public statements that contradicted it.

    But the settlement leaves a sour taste in many mouths – and certainly in Woods's. The deferred prosecution is part of this "cop-out all round", he says. "The regulatory authorities do not have to spend any more time on it, and they don't have to push it as far as a criminal trial. They just issue criminal proceedings, and settle. The law enforcement people do what they are supposed to do, but what's the point? All those people dealing with all that money from drug-trafficking and murder, and no one goes to jail?"

    One of the foremost figures in the training of anti-money laundering officers is Robert Mazur, lead infiltrator for US law enforcement of the Colombian Medellín cartel during the epic prosecution and collapse of the BCCI banking business in 1991 (his story was made famous by his memoir, The Infiltrator, which became a movie).
    Mazur, whose firm Chase and Associates works closely with law enforcement agencies and trains officers for bank anti-money laundering, cast a keen eye over the case against Wachovia, and he says now that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom".

    Mazur said that "a lot of the law enforcement people were disappointed to see a settlement" between the administration and Wachovia. "But I know there were external circumstances that worked to Wachovia's benefit, not least that the US banking system was on the edge of collapse."

    What concerns Mazur is that what law enforcement agencies and politicians hope to achieve against the cartels is limited, and falls short of the obvious attack the US could make in its war on drugs: go after the money. "We're thinking way too small," Mazur says. "I train law enforcement officers, thousands of them every year, and they say to me that if they tried to do half of what I did, they'd be arrested. But I tell them: 'You got to think big. The headlines you will be reading in seven years' time will be the result of the work you begin now.' With BCCI, we had to spend two years setting it up, two years doing undercover work, and another two years getting it to trial. If they want to do something big, like go after the money, that's how long it takes."

    But Mazur warns: "If you look at the career ladders of law enforcement, there's no incentive to go after the big money. People move every two to three years. The DEA is focused on drug trafficking rather than money laundering. You get a quicker result that way – they want to get the traffickers and seize their assets. But this is like treating a sick plant by cutting off a few branches – it just grows new ones. Going after the big money is cutting down the plant – it's a harder door to knock on, it's a longer haul, and it won't get you the short-term riches."

    The office of the comptroller of the currency is still examining whether individuals in Wachovia are criminally liable. Sources at FinCEN say that a so-called "look-back" is in process, as directed by the settlement and agreed to by Wachovia, into the $378.4bn that was not directly associated with the aircraft purchases and cocaine hauls, but neither was it subject to the proper anti-laundering checks. A FinCEN source says that $20bn already examined appears to have "suspicious origins". But this is just the beginning.

    Antonio Maria Costa, who was executive director of the UN's office on drugs and crime from May 2002 to August 2010, charts the history of the contamination of the global banking industry by drug and criminal money since his first initiatives to try to curb it from the European commission during the 1990s. "The connection between organised crime and financial institutions started in the late 1970s, early 1980s," he says, "when the mafia became globalised."

    Until then, criminal money had circulated largely in cash, with the authorities making the occasional, spectacular "sting" or haul. During Costa's time as director for economics and finance at the EC in Brussels, from 1987, inroads were made against penetration of banks by criminal laundering, and "criminal money started moving back to cash, out of the financial institutions and banks. Then two things happened: the financial crisis in Russia, after the emergence of the Russian mafia, and the crises of 2003 and 2007-08.

    "With these crises," says Costa, "the banking sector was short of liquidity, the banks exposed themselves to the criminal syndicates, who had cash in hand."
    Costa questions the readiness of governments and their regulatory structures to challenge this large-scale corruption of the global economy: "Government regulators showed what they were capable of when the issue suddenly changed to laundering money for terrorism – on that, they suddenly became serious and changed their attitude."

    Hardly surprising, then, that Wachovia does not appear to be the end of the line. In August 2010, it emerged in quarterly disclosures by HSBC that the US justice department was seeking to fine it for anti-money laundering compliance problems reported to include dealings with Mexico.

    "Wachovia had my résumé, they knew who I was," says Woods. "But they did not want to know – their attitude was, 'Why are you doing this?' They should have been on my side, because they were compliance people, not commercial people. But really they were commercial people all along. We're talking about hundreds of millions of dollars. This is the biggest money-laundering scandal of our time.

    "These are the proceeds of murder and misery in Mexico, and of drugs sold around the world," he says. "All the law enforcement people wanted to see this come to trial. But no one goes to jail. "What does the settlement do to fight the cartels? Nothing – it doesn't make the job of law enforcement easier and it encourages the cartels and anyone who wants to make money by laundering their blood dollars. Where's the risk? There is none.

    "Is it in the interest of the American people to encourage both the drug cartels and the banks in this way? Is it in the interest of the Mexican people? It's simple: if you don't see the correlation between the money laundering by banks and the 30,000 people killed in Mexico, you're missing the point."

    Woods feels unable to rest on his laurels. He tours the world for a consultancy he now runs, Hermes Forensic Solutions, counselling and speaking to banks on the dangers of laundering criminal money, and how to spot and stop it. "New York and London," says Woods, "have become the world's two biggest laundries of criminal and drug money, and offshore tax havens. Not the Cayman Islands, not the Isle of Man or Jersey. The big laundering is right through the City of London and Wall Street.

    "After the Wachovia case, no one in the regulatory community has sat down with me and asked, 'What happened?' or 'What can we do to avoid this happening to other banks?' They are not interested. They are the same people who attack the whistleblowers and this is a position the [British] Financial Services Authority at least has adopted on legal advice: it has been advised that the confidentiality of banking and bankers takes primacy over the public information disclosure act. That is how the priorities work: secrecy first, public interest second.

    "Meanwhile, the drug industry has two products: money and suffering. On one hand, you have massive profits and enrichment. On the other, you have massive suffering, misery and death. You cannot separate one from the other.

    "What happened at Wachovia was symptomatic of the failure of the entire regulatory system to apply the kind of proper governance and adequate risk management which would have prevented not just the laundering of blood money, but the global crisis."

    How a big US bank laundered billions from Mexico's murderous drug gangs | World news | The Observer
    Amnesty for 11 million will increase debt by $6.3 trillion And that doesn't count costs of 22 million additional legal immigrants in just 10 years!
    A Nation of of 3rd World Broke A@@es "AmeriKa" cannot afford an Invasion of Broke A@@es from the 3rd World

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