The Banksters and the Cartels

Two Colombian economists decided to see who’s getting money off the illegal drug trade. And they discovered that American and British banks are getting a big chunk of the profits. (h/t Chris from Americablog) That’s because the cartels are laundering their proceeds through those banks.

The most far-reaching and detailed analysis to date of the drug economy in any country – in this case, Colombia – shows that 2.6% of the total street value of cocaine produced remains within the country, while a staggering 97.4% of profits are reaped by criminal syndicates, and laundered by banks, in first-world consuming countries.

Mind you, I’m not sure the analysis would be that different for any agricultural export. Even for food, farmers make less than 12% of all the money spent.

But one of the factors, the economists contend, is that the US more stringently polices money laundering in Colombian banks than in US ones.

Colombia’s banks, meanwhile, said Mejía, “are subject to rigorous control, to stop laundering of profits that may return to our country. Just to bank $2,000 involves a huge amount of paperwork – and much of this is overseen by Americans.”

“In Colombia,” said Gaviria, “they ask questions of banks they’d never ask in the US. If they did, it would be against the laws of banking privacy. In the US you have very strong laws on bank secrecy, in Colombia not – though the proportion of laundered money is the other way round. It’s kind of hypocrisy, right?”

I have noted (as does the Guardian), how banks like Wachovia used drug proceeds to help offset their losses from the mortgage bubble shitpile. I have noted how much less stringent we were in rooting out all the crime than we are with other banks, such as the Lebanese Canadian Bank. And I noted Citi’s recent wrist slap for allowing money laundering in the same shitpile period.

This article shows the other side to that: while our banksters get rich off of crime here, Colombia and Mexico and Honduras suffer the violence that results. That really has to change.

13 replies
  1. JTM says:

    If the people running banks in Columbia are too stupid to start a PAC in the US, then I really don’t have a lot of sympathy.


  2. Jeff Kaye says:

    Glad to see you on this, but let’s take this a step beyond greed (which does play its own significant role here). The money laundering of drug trafficking funds is and has been historically used to funnel money to the CIA for various purposes. The classic example was BCCI, where heroin money was used to fund the arming the Afghan mujahideen (during war against the Soviet Union) and the Nicaraguan Contras, But there have been plenty of other examples. It is, in fact, Standard Operating Procedure for the US of A.

    Such freedom to use narco-dollars was provided to the CIA by the Reagan Justice Dept, in an internal deliberation that I believe has never been rescinded. See the document for yourself:

    As you’ve pointed out before, the US has a decided tilt in the Mexican drug wars towards the Sinaloa gang, even as they send CIA agents and the ever-present “private security contractors” to conduct secretive military ops with the right-wing Mexican government.

    In Mexico, as in Columbia, Honduras, etc., the US/CIA aim is to forestall popular movements against engrained and totally corrupted ruling elites who are allied with US and other Western capitalist interests. The longevity of the movements backing Columbian guerillas and populist peasant land seizures in Mexico (not to mention the labor unrest there) is testimony to the persistence of the material injustices in those countries, which feed the rebellions, or possibility of more rebellions.

    The US already stole the last Mexican election (see Greg Palast on that one), and are certainly amping up for the upcoming battle. The old ruling sectors in Mexico are so threatened by the candidacy of leftist Andres Manuel Lopez Obrador that the PAN by all accounts shocked their followers by suggesting they back the devil, i.e., the candidate of the old PRI. Meanwhile, the new US ambassador Obama sent to Mexico comes from his previous posting… in Kabul!

    Sorry to tilt here to Mexico as a subject, but I suppose I know more about it than Columbia.

  3. Kathleen says:

    When the 2008 sub prime fiasco hit the wall I remember reading about a huge chunk of change coming out of the ethers to prop things up until the Fed could legally access taxpayers money to prop up the banks

  4. bsbafflesbrains says:

    We are clearly seeing in recent times that the difference between a South American “banana republic” and the good ole USA is becoming very scant indeed. No longer an optimist about near future.

  5. pathman says:

    Noam Chomsky was all over this years ago. It’s nice to see some documentation though. What happens now? My guess is nothing. There is too much profit to be made so it will continue.

  6. jo6pac says:

    @pathman: Yep, your right nothing just like what happened in the old days of bcci. The same people running the show just a different corp. name until caught. Then again today it seems like they don’t even have to close down shop and open across the street. The doj just doesn’t care because it’s just become another part of the criminal part of govt.

  7. mzchief says:

    This article shows the other side to that: while our banksters get rich off of crime here, Colombia and Mexico and Honduras suffer the violence that results. That really has to change.

    Not just bankstas but investors in those banking operations reaping such profits. I just came across this regarding the Town of Southwest Ranches, FL and their contract for a 4% profit sharing with CCA (Wells Fargo’s holding) for a incarceration facility in which Fed taxpayer dollars would be involved:

    Corrections Corporation Of America Sues Florida Town For Blocking New Detention Center” (HuffingtonPost.Com, by Chris Kirkham, Mar. 9, 2012)

    Has anyone heard about FOIA (or any other legal or investigative) activity across the US and Canada (for reference is this article by Paula Mallea for the Canadian Centre for Policy Alternatives [CCPA] from Feb. 22, 2012 entitled Crime Omnibus Bill) with regard to this?

  8. Jeff Kaye says:

    @Phil Perspective: The whole Riggs Bank scandal sank out of view, it would seem. Even as a 2004 Washington Post story noted:

    Riggs officials have acknowledged years of deficiencies in reporting to law enforcement hundreds of millions of dollars in suspicious financial transactions by foreign customers, particularly those connected with the embassies of Saudi Arabia and Equatorial Guinea.

    Bush, Jr.’s uncle was Riggs CEO.

    Jack Shafer did a piece on Riggs Bank and the CIA at Slate in January 2005. But guess what, by summer 2005, Riggs was sold to PNC Bank. End of story.

    Of related interest, readers here might enjoy Doug Valentine’s article at Counterpunch from a few years back, “How the CIA Inflitrated the DEA Operation Two-Fold”.

  9. earlofhuntingdon says:

    Yes, thanks for covering this. As you and others have said, profits accrue to the banks through the enormous amount of funds being “processed” with the financial equivalents of Whisk and Tide, which wring these funds squeaky clean. It’s not just normal processing charges either; banks long ago gave up charging anything less than punishing rates for services. There are also “specials” charged for handling large cash transactions.

    As Jeff Kaye points out, this whole process legitimizes not just the cash. It legitimizes the way it’s made and the uses to which it is subsequently put, including the routine buying and selling of politicians and sometimes whole economies. That the US is now one of the two greatest aiders and abettors of this should come as no surprise in the post-partisan, post-racial, post-criminal society Mr. Obama now leads.

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