U.S. admits big banks launder $100 billion annually
Phony mechanism to be set up to regulate the banks
Published Nov 8, 2008 12:14 AM
Workers World is in its 50th year of publication. Below is an article
by Sam Marcy, founding leader of Workers World Party, that appeared in the WW
issue of Oct. 26, 1989.
By Sam Marcy
The [George H.W.] Bush administration publicly admitted on Oct. 4 [1989] that
over $100 billion in drug money is laundered by U.S. banks each year. Thus far
there have been no criminal prosecutions.
Civil penalties were levied against some of the biggest domestic banks in 1986
for failing to report large cash transactions.
Treasury official admits banks are raking in drug
money
The extraordinary admission came in the form of a carefully crafted
announcement made by Salvatore R. Martoche, assistant Treasury secretary for
enforcement, in testimony before the Senate Subcommittee on Terrorism,
Narcotics and International Operations.
The “good news,” according to Martoche, is that the government will
open a financial crimes center next month in Arlington, Va., which will monitor
the banks. Says Martoche, “It represents a substantial stride in the area
of money laundering both domestically and internationally.”
But the bad news is that the banks, especially the big ones, are raking in
billions of dollars a year in profits as a result of the illegal transmission
of drug money. This windfall, which flows into their coffers at breakneck
speed, is now estimated at $110 billion a year! (New York Times, Oct. 5,
1989)
How much of this drug money has been involved in the feverish speculation which
is the symptom of every economic collapse?
It is not clear why the Treasury made this announcement so suddenly, or what
events led up to this extremely significant admission, except that the amount
of drug money transferred through the banks is so staggering that the Bush
administration and its so-called enforcement agencies cannot maintain silence
any longer. Such an acknowledgment is of course especially damaging to
Bush’s “drug czar,” William Bennett.
The government to this day has not explained why its chief financial officers,
who deal with the banks on an everyday basis, have not been called by the
Senate or the House of Representatives to testify on the specifics, the when,
where and who of drug money laundering. Nor have they been required to explain
why the civil penalties enacted many years ago have been applied in only a few
cases.
Why, for instance, has the government never made public the number of banks
found guilty of civil violations for failure to file reports on their cash
transactions over $10,000?
The administration says that electronic money transfers as a whole by U.S.
banks amount to more than a trillion dollars a day. Martoche didn’t
explain how his agency arrived at the figure $110 billion in drug funds
laundered each year. All of this leads to the conclusion that the situation
between the government and the banks, which are so closely interrelated, may be
reaching an explosion point.
The federal agencies responsible for dealing with the banks and the currency
are the Treasury Department, headed by Secretary Nicholas F. Brady; the
Currency, under Comptroller Robert L. Clarke; and the Federal Reserve Bank,
headed by Chairman Alan Greenspan. While they all have made innumerable
appearances before the House and Senate banking committees, no testimony has
been elicited from them on this explosive issue, nor has it been
volunteered.
Banks complain of paperwork
The subcommittee that heard testimony from Martoche is headed by John F. Kerry,
Democrat of Massachusetts and chairman of the Senate Foreign Relations
Committee. Thus far, this subcommittee seems to be so solicitous of the banks
that instead of asking the principal federal agents named above any questions
about money laundering, it instead is concerning itself with the proposed
enforcement agency, which seems far up in the stratosphere.
The banks have come before the subcommittee to complain of how onerous it is to
compile data on deposits because of the tremendous “backlog” of
paperwork. No one has been called to testify about the backlog of arrests of
thousands of youth who are regularly imprisoned precisely because the drug
industry is flourishing on funds laundered by the banks, in secret alliance
with the government.
The government’s alibi for allowing all this to go on is that it is too
difficult to monitor the electronic transmission of such gargantuan sums of
money. This is pure fiction. The U.S. government has the world’s biggest
electronic establishment. In addition, it has technological and economic ties
to every part of the capitalist world. It can avail itself of their technology
and expertise as well.
Even if the government itself can’t monitor the situation, which is
doubtful, it can always hire consulting firms to do an independent study. But
in this case, such a recourse is not even discussed.
The Kerry subcommittee, according to the Boston Globe of Oct. 1 [1989], is
trying to steer the investigation toward the involvement of banks in Canada and
some European countries, which are said to be receiving large transfers of
laundered money from U.S. banks. But this line of inquiry is a way of diverting
attention from the big U.S. banks—the Bank of Boston, for instance, in
Kerry’s home state, which had been cited earlier for concealing cash
transactions from the government (as we detailed in our previous articles [of
Sept. 7 and Sept. 21, 1989]).
Gov’t could seize banks’ assets
There are numerous statutory provisions that require filing by the banks. The
government has not addressed this with criminal penalties.
All of these statutory provisions under the banking laws and the federal
criminal code can be invoked against the banks. Even under the old common law,
on which the relevant statutory criminal provisions are based, it is a crime
“to receive, hold or transfer stolen goods or money,” which is what
drug money is.
The U.S. government has the authority to seize these assets. Wouldn’t
that go a long way toward financing the social programs that are being cut so
mercilessly? Certainly the government has wider authority to take such a step
than to arrest individuals beyond its jurisdiction, or to kidnap them, as it
has been trying to do with [Panamanian President Manuel] Noriega in an attempt
to overthrow the Panamanian government under false pretenses.
However, it is not merely a question of the law. It’s a question of the
intimate, symbiotic relationship of the banks and the capitalist government.
Sooner or later the lid is bound to blow off, as the drug profits grow larger
and larger.
The vigorous intervention of the progressive, civil rights and working class
movements can force the Bush administration to change its focus, which now is
to throw money at the police, the military, the dozens of enforcement agencies
and phony drug centers which are not controlled by the communities.
At the present time the target of the administration is the poor of the inner
cities. Hundreds of arrests of innocent young people are made daily. The
tremendous media attention focused on drugs and the inner cities causes racism
to run amok.
The only way to effectively combat the drug profiteers and the bankers is for a
nationwide, class-wide movement of the workers and all of the oppressed people
against the drug-money banks and the government, which refuses to prosecute
them and in fact protects and defends them.
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