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Old 08-04-2013, 09:50 AM   #1
baja
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Default US Banks; The new Mafia

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



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.





Read the rest here;


http://www.theguardian.com/world/201...ico-drug-gangs

Last edited by baja; 08-04-2013 at 09:59 AM..
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Old 08-04-2013, 11:05 AM   #2
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Wachovia was eventually shut down for laundering drug money. Just then, Well Fargo stepped in and absorbed Wachovia.

Nothing changes. The criminal activity continues.
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Old 08-04-2013, 11:07 AM   #3
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Many years ago -- Wachovia developed such a bad rep for abusing its customers -- the bank was based I think in N Carolina -- that people in the state referred to it as "walk - ova- ya"
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Old 08-04-2013, 11:10 AM   #4
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Many years ago -- Wachovia developed such a bad rep for abusing its customers -- the bank was based I think in N Carolina -- that people in the state referred to it as "walk - ova- ya"
Washington state bank I believe
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Old 08-04-2013, 12:26 PM   #5
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Corporations are people, but there is no person in a corporation that you can charge with a crime? A very merry unbirthday, to you.
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Old 08-04-2013, 03:22 PM   #6
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Default Wachovia...

US taxpayers effectively bailed out Wachovia in 2008 when it got into trouble for $ laundering. MHG

from A Walk on the Dark Side...


http://www.foreignpolicyjournal.com/...rt-3/view-all/


Citigroup may be the largest, but it is not the only big US bank involved in narco-trafficking. Others include Bank of America, American Express Bank, Wells Fargo and Wachovia, none of which has ever been criminally prosecuted in a US court for their participation in the drug trade. Recently, Bloomberg reporter Michael Smith learned the answer to the question why when he interviewed Jack Blum, a long-time US Senate investigator and banking industry consultant. Said Blum: “There’s no capacity to regulate or punish them [the big banks] because they are too big to be threatened with failure.” This explains why “they seem….willing to do anything that improves their bottom line, until they’re caught.” Blum called their too-big-to-fail status “a get-out-of-jail-free-card for big banks.”[55]

That is certainly how it played out when Wachovia was caught red-handed in “the biggest money-laundering scandal of our time.” [56] The plot began to thicken in 2006 when Mexican authorities discovered 5.7 tons of cocaine packed in 128 black suitcases (estimated street value: $100 million) in a DC-9 at the international airport of Ciudad del Carmen, located 500 miles east of Mexico City. Authorities later learned that narco-traffickers had purchased the plane with funds laundered through Wachovia Corp. and Bank of America. It was no isolated incident. A 22-month federal investigation disclosed that during a three-year period alone, from May 2003 to May 2007, Wachovia had processed $378 billion in questionable transfers from Mexican currency exchange houses, in the form of wire transfers, traveler’s checks and cash shipments. The whopping figure is the equivalent of roughly one-third of Mexico’s gross domestic product.

The noose began to tighten on May 16, 2007, when DEA agents raided Wachovia’s international offices in Miami, seizing bank records. A “back look” at the transactions confirmed that drug cartels had used Wachovia’s correspondent banking services to launder a minimum of $110 million in drug profits. Doubtless, this was only the tip of the iceberg, but was still the largest violation of US money-laundering laws in history.[57] The cartels had used the laundered cash to purchase weapons, safe-houses, and aircraft for the narcotics trade. During the investigation, authorities also seized 22 tons of cocaine. According to Jeffrey Sloman, a federal prosecutor involved in the case, “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.”[58]

When Wachovia’s own anti money-laundering officer, Martin Woods, attempted to bring the problem to the attention of bank officials, the same officials told him to keep quiet. Woods persisted, to his credit, and became the target of internal harassment and bullying by bank officials. He lost his job and, even though later vindicated by the federal probe, ultimately, had to bring suit against the bank to get restitution. In the end, Wachovia refused to curb its lucrative dealings with the dubious Mexican currency houses, that is, until the financial media began to report the ongoing federal investigation.[59] But then, Wachovia has a long history of caring more about the almighty dollar than the people it serves. Founded in Charlotte, North Carolina in 1879, Wachovia foreclosed on so many farms and businesses during the Great Depression that the bank became known in the Southeast as Walk-over-ya.[60]

Although federal authorities threatened Wachovia with criminal prosecution, the case never went to court. Despite its profits from money laundering, Wachovia suffered huge losses in 2008 as a result of the sub-prime fiasco, and was rescued by Wells Fargo for a reported $12.7 billion. The merger happened within days of Wells Fargo’s $25 billion federal bailout—which, notice, means that the US taxpayer footed the bill for the acquisition (and then some). In 2010, Wells Fargo settled with the US government on behalf of Wachovia by paying $160 million in fines and penalties. Wells Fargo agreed to upgrade its money laundering detection efforts; and, after a year’s probation, the federal government dropped all charges in March 2011. Although the $160 million fine was a hefty sum, it was still less than 2% of Wells Fargo’s reported earnings in 2009. Indeed, bank officials probably viewed the fine as just another cost of doing business.

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Old 08-04-2013, 04:05 PM   #7
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Although federal authorities threatened Wachovia with criminal prosecution, the case never went to court. Despite its profits from money laundering, Wachovia suffered huge losses in 2008 as a result of the sub-prime fiasco, and was rescued by Wells Fargo for a reported $12.7 billion. The merger happened within days of Wells Fargo’s $25 billion federal bailout—which, notice, means that the US taxpayer footed the bill for the acquisition (and then some). In 2010, Wells Fargo settled with the US government on behalf of Wachovia by paying $160 million in fines and penalties. Wells Fargo agreed to upgrade its money laundering detection efforts; and, after a year’s probation, the federal government dropped all charges in March 2011. Although the $160 million fine was a hefty sum, it was still less than 2% of Wells Fargo’s reported earnings in 2009. Indeed, bank officials probably viewed the fine as just another cost of doing business.

See this is what I find so disheartening. The above quote is so outrageous that it should have been the top story in the main stream news for months and months until something was done and new regulations put on place instead we get some celebrity bull shiit news 24/7. America has been stolen away right under the noses of the American people that have been rendered almost brain dead by chemicals in the "food" Chemicals in the air via chem trails and dumbed down by TV messaging and brain washing in the school system.

In short we are Farked
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Old 08-04-2013, 04:28 PM   #8
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Old 08-04-2013, 06:45 PM   #9
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Hey, no hurling on the shell, dude,

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If you don't personally cease and desist from every and all interactions with the banking cartel (BoA, Citi, JPM, Goldman Sucks, Wells Fargo), then YOU are part of the problem.
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Old 08-04-2013, 10:07 PM   #10
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Do yourself and the economy a favor:

Join a credit union.

I haven't paid a bank fee in 10 years. No checking fees. No transfer fees. No debit card fees. No nada. I also get unbeatable loan rates.

Oh yeah, and my credit union (as with most credit unions) didn't over leverage and **** everyone.

I know righties. It's not a for profit business and the CEO only gets paid around $400,000, so it couldn't possibly be a good business...
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Old 08-04-2013, 10:11 PM   #11
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Do yourself and the economy a favor:

Join a credit union.

I haven't paid a bank fee in 10 years. No checking fees. No transfer fees. No debit card fees. No nada. I also get unbeatable loan rates.

Oh yeah, and my credit union (as with most credit unions) didn't over leverage and **** everyone.

I know righties. It's not a for profit business and the CEO only gets paid around $400,000, so it couldn't possibly be a good business...

Hey something we can agree on, how about that....
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Old 08-05-2013, 11:28 AM   #12
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The f--- y'all motherf-ckas want?

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Originally Posted by Fedaykin View Post
Do yourself and the economy a favor:

Join a credit union.

I haven't paid a bank fee in 10 years. No checking fees. No transfer fees. No debit card fees. No nada. I also get unbeatable loan rates.

Oh yeah, and my credit union (as with most credit unions) didn't over leverage and **** everyone.

I know righties. It's not a for profit business and the CEO only gets paid around $400,000, so it couldn't possibly be a good business...
I agree with this too. Or at least join a small community bank instead of the big national banks. It's in the community bank's best interest to see the local area grow and prosper.
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Old 08-05-2013, 06:44 PM   #13
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Not to quibble - but the banksters are not the NEW mafia -- they've been the mafia all along.

Probably worse than the mafia.
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