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Report: US banks laundering money for Mexican drug war

By admin
Friday, July 2, 2010 17:00 EDT
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Wachovia admits at least $110 million laundered through its branches

US banks are playing a crucial role in the running of the Mexican drug trade, allowing their facilities to be used to launder money in a drug war that has taken the lives of more than 22,000 people in the past four years, a new investigative report reveals.

According to a report from the August, 2010, issue of Bloomberg Markets magazine, both Bank of America and Wachovia are implicated in drug-money laundering schemes to purchase jets to smuggle drugs.

The report, by Michael Smith, chronicles the seizure of a DC-9 jet at a Mexican airport in 2006 which contained $100 million-worth of cocaine. Investigators found that drug smugglers had bought the plane with money laundered through BofA and through Wachovia, which was bought out by Wells Fargo in 2008.

Smith reports:

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.

Bloomberg obtained a copy of an agreement (PDF) between prosecutors and Wachovia, signed in March, in which the bank admitted it had not done enough to watch for money-laundering schemes among some $378 billion it transferred between its branches and Mexican currency-exchange houses from 2004 to 2007.

“The investigation has identified at least $110 million in drug proceeds that were funneled through the [currency-exchange] accounts held at Wachovia,” the agreement states.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” Bloomberg quotes federal prosecutor Jeffrey Sloman.

Wachovia agreed to pay $160 million to settle the court case in exchange for charges being dropped, a move Sloman described as “historic.”

Bloomberg also reports that a former Wachovia executive in charge of anti-money laundering operations “quit the bank in disgust” after managers ignored his reports that drug money was being laundered through its facilities.

“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods said.

Bank of America and UK-based HSBC have been connected to money laundering schemes, according to the Bloomberg report.

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.

Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009. Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc, Europe’s biggest bank by assets, an investigation by the Mexican Finance Ministry found.

Drug-related violence has been spiraling out of control along the US-Mexican border in recent years. Ciudad Juarez, across the river from El Paso, Texas, has recorded 700 murders so far this year. Earlier this week, a “clash” between rival drug gangs left 21 people dead.

The violence has even begun to permeate Mexican politics, with three drug-related assassinations against government officials in just the past two weeks. A mayor and city councilor were killed Wednesday evening. Hours later, a deputy attorney general in Cihuahua state was killed. The recent disappearance of a former presidential candidate has drawn speculation linking the incident to the drug wars.

 
 
 
 
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