Friday, February 20, 2009


The problem defined:  The purpose of money laundering is to disguise financial assets that can be used without detection in the pursuit of illegal activities. Drug dealers, terrorists, arms dealers, and other criminals operate and expand their enterprises through the use of laundered money. While this may seem an obvious point, what is less understood is how criminals use our banking system to further these activities.

A case in point, this older story about American Express from August 6, 2007:

American Express Co. (AXP.N) agreed to pay $65 million for failing to detect drug-related money transactions laundered through a subsidiary over several years, U.S. authorities said on Monday.

All American financial institutions are required to comply with the Bank Secrecy Act, which requires institutions to flag any transactions deemed suspicious and report movements of money over $10,000.

According to a GAO Report (July 2002), an estimated $500 billion is laundered annually. In the same report, the GAO admits: "The extent to which money laundering through credit cards may be occurring is unknown."

What these accounts fail to mention is the ease of using money orders and travelers’ checks as a means of money laundering.  This issue dogged American Express decades ago when Treasury officials confronted the firm in the 1980s for lax monitoring of its Travel Related Services (TRS) division.  Amex and other banks have long taken the position that it is too burdensome to report suspicious transactions to law enforcement.  My point: The story of banks participating in money laundering schemes does not begin nor end with Sir Allen .  In this context, Wall Street has always been a partner in crime, and this has been going on for a very long time.

1 comment:

  1. As a former banker I can unequivocally state: damn straight. It certainly has gone on for a very long time. I'm not sure it's ALL purposeful. We follow 'the guidelines'. Just that. Hellishly easy to ... avoid the guidelines.
    Home depot cash cards heavily advertised, as well. One HAS TO WONDER. LMAO


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