[Note from Elias Alias: This article is thorough, and I've found that almost all thorough articles these days require too many words, are too long, and tend to discourage some readers because of the length necessary to give the complete picture. Considering that, I've decided to post this article in two parts, as well as provide the link where readers can see it at the original site. The reason I want to post this article in full is to insure that the article remains available. This is one very important story, and the mainstream media/press has no interest in sharing this information with the average American voter. But no matter how much the media and press hate to admit this, here is the ugly truth, or part of it, behind the so-called "war on drugs". One last thing please - when reading this article, please keep in mind my article entitled Oath Keeping At The ATF, and muse upon the question of how government gun-running to the Mexican drug cartels may now be seen in tandem with corrupt banking and lax Federal transparency. See footnote #1 below article for link.]
American Banks ‘High’ On Drug Money: How a Whistleblower Blew the Lid Off Wachovia-Drug Cartel Money Laundering Scheme
A fraud investigator helped expose the shocking world of multi-billion dollar drug laundering by American banks and the surprising lack of oversight by the Feds.
June 10, 2011 |
Read original here: http://www.alternet.org/drugs/151135/?page=entire
Martin Woods, an Englishman in his mid-40s, is blessed with a Sherlock Holmes instinct and demeanor. Woods is an expert at sniffing out “dirty” money passing through International Banking Systems.
A police officer for 18 years and later a detective with London Metro Police Agency, Woods capitalized on his unique expertise as a fraud expert by joining Wachovia’s London-based Bank in March 2005 as an anti-money laundering officer.
It wasn’t long after taking the job that he discovered that his own employer, one of America’s leading banks, was a major player in aiding the “bloodthirsty” Mexico drug cartels to launder billions of dollars in drug money through Wachovia banks. Woods traced and identified a “number of suspicious transactions” related to Mexico-based Casa de Cambios (CDC).
Casa de Cambios are currency-exchange operations set up along the U.S. Mexico-border to assist cross border transfers of money to remit labor paychecks. And on the illegal side the Casa de Cambios are also known as the superhighway for narcotic proceeds into the U.S. and overseas financial markets.
When Woods zeroed in on deposited traveler’s checks with sequential numbers sent by the CDC he discovered that large amounts of funds were exceedingly more than a typical person would need. The questionable CDC checks either lacked adequate identifying information or had none at all, including no legible signatures affixed on the funds.
Following this discovery investigator Woods issued a “suspicious activity report” (SAR) on a series of the CDCs’ financial transfers and deposits. Then he requested the CDC checks to be temporarily blocked from transaction pending further investigation.
Not long after, an exchange of heated words occurred. A senior Miami-based manager called Woods’ SAR reports “defensive and unwarranted.”
Feeling jaded, Woods, as he recalls, “came under fire from the bank staff to change tactics and develop a better understanding of Mexico.”
Wachovia officials ordered Woods to cease inquiries about Mexican CDCs and to also stop blocking other Eastern Europe and Moscow accounts. The British investigator, snapped, “I don’t need to read up on Mexico. My interest are drug trafficking and money laundering.”
His instincts proved correct. On April 10, 2006, during early morning hours, a DC-9 airplane landed onto the tarmac at the International Airport in the port city of Ciudad del Carmen, located east of Mexico City. Once the engine turned off, military soldiers trained by U.S. FBI agents immediately grew suspicious and surrounded the aircraft. Armed with high-powered weapons, the soldiers searched the luxury plane and discovered five-plus tons of pure cocaine packed in suitcases.
The cocaine was valued at $120 million, and the Feds working with Mexico later determined the drugs were headed for the United States from Venezuela. A stash of paperwork found on the plane eventually identified discreet connections between an American bank and Mexico-based currency operation Casa de Cambios Puebla. A subsequent investigation would prove that Wachovia Bank washed billions of illegal drug money into the U.S. financial system on behalf of the Mexico-based Casa Cambios.
With U.S. Federal law enforcement backing him up, Martin Woods’ investigation assisted the Feds to build an airtight case against Wachovia. Starting off, the Feds discovered that $13 billion dollars in drug money was transferred by the CDC into correspondent bank accounts at Wachovia to purchase airplanes for the use of trafficking drugs from Colombia to Mexico and then the drugs were shipped to the U.S.
This high-profile investigation ultimately revealed that from 2004-2007, a staggering amount of illegal drug proceeds totaling $378.4 billion dollars were transferred into Wachovia by the Mexico-based Casa Cambios that violated U.S. government anti-money laundering compliance.
Following these findings a slew of federal charges filed in 2009 by Federal prosecutors in Florida hit Wachovia with the largest violation of the Bank Secrecy Act in U.S. history.
Douglas Edwards, senior vice president of Wachovia Bank confessed they didn’t do enough to spot illicit funds in handling the $378.4 billions for the Mexico’s Casa Cambios. But Edwards declined to answer specific questions including how much they earned for handling the billions of dollars for the currency operation.
Overall, the amount of drug proceeds ($378 billion dollars) that the CDC deposited into Wachovia Bank actually equaled one third of Mexico’s entire $1.4 trillion dollar annual GDP.
As part of the agreement Wachovia agreed to pay the government a fine of $110 million dollars with an additional fine of $50 million dollars to be paid to the U.S. Treasury Department. The total fine of $160 million dollars was less than 2% of the bank’s $12.3 billion dollars in profit made in 2009. By the time Wachovia agreed to pay the hefty fine, Wells Fargo purchased Wachovia during the banking crisis for $12.7 billion. Then Well Fargo reaped a windfall from the government, a gift of $25 billion dollars of taxpayers money as part of President Obama stimulus package in 2009.
“Today, we announce the deferred prosecution of Wachovia, one of the largest banks in the United States, said U.S. Jeffrey Sloman on March 12, 2010. “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations by laundering drug proceeds.”
Sloman further stated, “as this case demonstrates, financial institutions—no matter how large will be held accountable when they allow ‘dirty’ money to pollute the U.S. banking system.”
The Wachovia scandal sent fears into the banking industry among prominent members because now they suspected the Feds would crack down more heavily against foreign customers, particularly Mexico.
In an interview with a Daily Business Review reporter, International Banking Attroney Clemente Vazquez-Bello, said, “The concern, obviously, in the industry is are we going to pay for the sins of Wachovia. … It’s mind-boggling beyond comprehension that in the compliance world that an institution of their size and stature would have permitted these enormous deficiencies.”
Mexico Drug Cartel
Mexican drug lords are among the world’s most dangerous and wanted criminals. They are savage, rich, notorious for violence, and transport massive shipments of narcotics into the United States and throughout the world. They profit billions from the prohibitionist drug policies of the U.S. government.
When Mexico president Felipe Calderon took office in December, 2006, he immediately ordered the armed forces to kill or capture the cartels including their members and associates. So far, the unrelenting violence has killed more than 35,000 people, with 15,000 last year. Overall, the stark reality in this ongoing brutal and sadistic violence has failed to stem the drug war.
The tremendous amount of proceeds that the CDC transferred in-and-out of Wachovia bank raise a provocative question: How do Mexican cartels get their money into American banks? Either banking officials were asleep at the wheel or tacitly ignored the shady business going on to boost profits for themselves.
“The failure of U.S. banks to take adequate steps to prevent money laundering is a widespread and ongoing problem,” said Michigan U.S. Senator Carl Levin in February 2010.
Investigative journalist Daniel Hopsicker wrote stories about the Wachovia drug cartel scandal on his website. Hopsicker’s investigation uncovered the fact that the airplanes that were busted with cocaine and purchased through Wachovia with illegal drug funds, previously had a steamy relationship with CIA and National Defense contractors.
Disappointed that the case against Wachovia didn’t go to a criminal trial, investigator Woods lamented, “Bankers will continue to take dangerous risks because the deferred prosecution concludes there’s no personal consequences for their actions.”
“We were hoping the case against Wachovia went to trial because the laundering of drug money was related to organized crime, drug trafficking and thousands of murders in Mexico,” he said.
Antoino Maria Costa, former executive director of the United Nations Office on Drugs and Crime said in 2008, “there’s evidence to suggest that proceeds from drugs and crimes were the only liquid investment capital for banks in trouble of collapsing [during the financial crisis].”
If billions of dollars in drug money rescued banks and other financial institutions from closing down then it’s reasonable to argue that the economy itself is addicted to drugs.
As professor Dale Scott noted in his book, American War Machine: Deep Politics; the CIA Global Drug Connection: “A U.S. Senate staff chaired by the banking committee reportedly estimated that between $500 billion and $1 trillion dollars are laundered each year through banks worldwide, with approximately half of that amount funneled through U.S. Banks.”
The UK Independent newspaper reported in 2004 that drug trafficking constituted “the third-biggest global commodity in cash terms after oil and the arms trade.”
“New York and London are the world’s biggest financial institutions for money laundering and offshore tax havens,” Woods told this journalist during recent interview. “New York is the global currency for legitimate and criminal business because it is offshore to everywhere. And London is the world’s biggest financial center by value and volume.”
Clarence Walker is a veteran Houston-based journalist who writes on criminal justice issues. He can be reached at firstname.lastname@example.org
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