If the US government is serious about tackling money laundering by well-known banks on behalf of drug barons, other big-time criminals and rogue states, it is going to have to raise its game.
Robert Mazur, a former federal agent, has written a powerful op-ed piece in the New York Times suggesting a revised approach. He believes what America needs is a "small elite multi-agency task force" focused on investigating the "dirty bankers"—normally people inside the offshore and private client divisions of large cross-border banks—who engage in money laundering.
Mazur, president of Florida-based forensic investigators Chase & Associates, knows a thing or two about such matters. When working for the US Customs Service in the late 1980s, he spent a few years working undercover as a money launderer to Colombian drugs barons.
It was this undercover work, which Mazur wrote about in The Infiltrator: My Secret Life Inside the Dirty Banks Behind Pablo Escobar's Medellín Cartel, that prompted the global authorities to shut down the London-based Bank of Credit & Commerce International (BCCI) in 1991.
During the undercover work, Mazur secretly recorded hundreds of conversations behind closed boardroom doors with sophisticated international bankers. During the investigation he also discovered where General Manuel Noriega, the former Panamanian dictator, had squirreled away his fortune in pay-offs from Colombia's cartel leaders.
Anything would be preferable to the current system. According to Mazur's New York Times article, the US government has grown lax where money-laundering is concerned. When banks are caught red-handed moving huge sums of drug money or other funds of questionable provenance around the world and scrubbing it clean, the executives responsible rarely face prosecution or jail, said Mazur.
In a recent case involving Barclays, the London-based bank paid a $298m fine after admitting to surreptitiously processing transactions with financial institutions in Cuba, Iran, Libya, Myanmar and Sudan in violation of US trade sanctions. Barclays accepted that staff at a Dorset payment processing center had changed the wording in international money transfers between 1995 and 2006 to disguise the deals with blacklisted countries.
Mazur says these sort of settlements occur because the US federal law enforcement agencies are lazy and disjointed. He said banks that are discovered to be helping criminals and rogue states "just admit to criminal conduct and pay the government a cut of their profits."
Mazur believes Uncle Sam needs to raise its game, and recommends it adopts a much tougher and more hands-on approach by establishing:
"A small but elite multi-agency task force, including representatives of the intelligence community and accomplished members of law enforcement agencies from other nations, that could identify the institutions and businesses that handle the bulk of the dirty money flowing around the globe. A task force numbering 100 people or less, at least initially, could compile a database containing detailed information about bad banks and money launderers.
"Some of this data could be culled from the various law enforcement agencies’ existing files. But investigators should also debrief the hundreds of high-level criminals now being held in our prisons to get detailed information about their allies in the banking and business community.
"The task force should also try to identify every asset used by major criminal and terrorist organizations. If one of them buys a million-dollar airplane, for example, investigators should find out where the money to buy it came from. All this information should be kept in the same database."
Mazur believes that, after a while, the data collected by the new organization would “reveal a pattern of activity that would point to dirty bankers and businessmen.” Mazur concluded by saying:
"In order to make use of the intelligence, undercover agents from around the world should be trained and equipped with the tools needed to infiltrate the banking and business community. Working with the information in the database, they could inflict a devastating blow to the fortunes of the underworld and its money launderers."
That would surely be a better solution than turning a blind eye and accepting some of the proceeds crime, wouldn't it?
Further reading on US money laundering and abuse of tax havens
- Understanding Reputation Risk and Its Importance, by Jenny Rayner
- Offshore havens, Part 1: Riding out the frenzy, by Anthony Harrington [blog post]
- Transparency could take the heat off tax havens, by Anthony Harrington [blog post]
Tags: banking , money laundering , US