Imagine standing in the court while the judge announces a punishment to a gun that killed a person and lets the shooter walk away free. That is exactly what is happening in the world of financial transactions. Hundreds of billions of dollars worth of money is being laundered every month, amounting to trillions a year, by the top notch banks around the globe and not a single Executive is every punished. United Nations Office on Drugs and Crimes has given compelling evidence with names and characters involved in this dubious trade but the authorities look the other way, repeatedly and for decades.
A small fine is paid, small in comparison to the amount of money they have laundered, to the authorities, some backdoor deal is cut and all is hushed up. And once it is hushed up, they go about doing the exact same thing again, perhaps with a higher resolve.
No drug dealer, no corrupt politician or no Dictator can benefit financially if these bankers are not in bed with them. A drug lord needs the proceeds of the drug sales to reach his account otherwise the trade is not financially beneficial. Drugs are produced in third world countries and get their highest price in the first world countries. No one writes a check for a drug transaction and leaves a financial trail behind. All transactions, no matter how small, are conducted in cash. A transaction taking place in cash in Chicago does not benefit the drug lord sitting in Columbia or Mexico unless the cash reaches his account in some safe haven. And the cash is not carried in trucks across the border. That cash has to be laundered by the local banks in Chicago to the destination of choice of the drug lord. The bigger the bank, the more cash it can take in everyday and wash it through its operations.
So, the top notch banks in the world are the biggest beneficiaries of this business.
Names that will make you think twice about doing business with them again. Names that may have given you a home mortgage on one side, are funding this bloody trade on the other side.
Let’s name them. And with evidence. JP Morgan Chase. Citigroup. Danske Bank. Wachovia. ING. Commerz Bank. Deutsche Bank. 1MDB. Commonwealth Bank of Australia.
You may be wondering how I can name such big institutions and claim that they are involved in money laundering. Well, I am not saying that, it is The United Nations who is saying it and it is these institutions themselves who have paid hefty fines to settle their cases out of court to avoid prosecution who are screaming of their own guilt. I have never understood in my decades of financial world experience as to why the prosecutors are so lenient with the largest money launderers and punish any other non-western financial institution that is caught with laundering even the smallest amount.
Are the authorities eliminating the competition on behalf of the larger financial institutions? It is beginning to seem like it.
Between 2007 and 2012, Citigroup used its subsidiary called Banamex USA and laundered $8.8 in transactions. When it was caught by the Federal Reserve and the Californian authorities in 2015, it offered to cut a deal in 2017 and settled the case with a fine of $237 million. Imagine, launder $8.8 billion, get caught, pay $237 million and no arrests, no punishments, no closure, just walk away and set up a new subsidiary and do it all again. Wait, it gets better, read on.
JP Morgan, Yes, JP Morgan. The dream working place for every aspiring Investment Banker, Trader or even an IT person. The destination of most Ivy League graduates. Yes, that JP Morgan. For 15 years JP Morgan let $65 billion dollars slip through its accounts without any oversight and when it was caught, it agreed to pay a fine of $2 billion and it is back to business as normal.
Goldman Sachs, the God of Investment Banking on Wall Street has recently been indicted by the Malaysian authorities in helping its previous Prime Minister loot about $7 billion through complicated schemes put together and monitored by GS & Co. Its head of operations arrested in Malaysia but no arrests in the country where it is head quartered.
Let’s talk about the mother of all money laundering with the smallest of fines when caught. Wachovia Bank was taken over by Wells Fargo and just within 3 years under the umbrella of Wells Fargo, the Mexican Drug Cartels laundered $373 billion dollars through their accounts at the bank. The bank got caught and settled for a tiny fine of $160 million dollars. Laundering of $373 billion, a fine of $160 million. No arrests. No shutting down of business. Nobody went to jail. Could there be a better deal than this? I do not think so.
Standard Chartered paid $967 million in fines. HSBC paid $1.9 billion in fines. Danske Bank is under investigation for laundering $200 billion through its accounts. And the list goes on and on.
This lopsided demand of the West to curb terrorism in the East, is standing on paper stilts. How can you let the terrorism financing or drug trade financing or go unpunished in your own country and ask the affected of such financing to take action. It is like asking the victim to apologize to the culprit. And that is exactly what is happening.
Until and unless we formulate rules and regulations in our respective countries and punish the culprits like Malaysia is just doing it, independent of the American intervention, nothing is going to get better.
We will continue to punish the gun and reward the shooter.
Author: Mir Mohammad AliKhan