Big Banks Started Laundering Massive Sums of Drug Money In the 1980s … And Are Still Doing It Today

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It has become mainstream news that at least some of the big banks are  laundering staggering sums of drug money.  See thisthisthisthisthisthis and and this.

But you may not know the scope or history of the problem.

Official statistics show that huge sums of drug money are laundered every year:

The United Nations Office on Drugs and Crime (UNODC) conducted a study to determine the magnitude of illicit funds generated by drug trafficking and organised crimes and to investigate to what extent these funds are laundered.  The report estimates that in 2009, criminal proceeds amounted to 3.6% of global GDP, with 2.7%  (or USD 1.6 trillion) being laundered.

This falls within the widely quoted estimate by the International Monetary Fund, who stated in 1998 that the aggregate size of money laundering in the world could be somewhere between two and five percent of the world’s gross domestic product.  Using 1998 statistics, these percentages would indicate that money laundering ranged between USD 590 billion and USD 1.5 trillion. At the time, the lower figure was roughly equivalent to the value of the total output of an economy the size of Spain.

Indeed, the head of the United Nations Office on Drugs and Crime says that drug dealers kept the banking system afloat during the depths of the 2008 financial crisis.

This started a long time ago. For example, Citibank was caught laundering drug money for Mexican cartels in 2001.

In the 1990s, earlier, Citibank apparently set up special client accounts for a big drug dealer:

One of the more infamous cases involving taxpayer bailed-out Citigroup’s ties to money laundering drug cartels emerged in the late 1990s when Raúl Salinas de Gortari, the brother of former Mexican President Carlos Salinas, was arrested after his wife, Paulina Castañón, attempted to withdraw $84 million from a Swiss account controlled by Raúl under an alias.

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According to a 1995 Los Angeles Times report, Salinas “amassed at least $100 million in suspected drug money.”

Switzerland’s top prosecutor at the time, Carla del Ponte, “launched the investigation after the U.S. Drug Enforcement Administration supplied information that led Swiss agents to the accounts in Geneva, where they arrested Raúl Salinas’ wife and her brother on Nov. 15 as the pair attempted to withdraw more than $83 million.”

Read More at Washington’s Blog

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