“There are far more ‘bad apples’ in the banking sales industry, in the legal profession, in the financial service provider industry and in the international business community than the world can comprehend.” – Robert Mazur

Drug cartels are menacing on two levels: they mass produce and sell extremely addictive drugs literally by the ton, and they leverage highly effective global money laundering systems to plow their illegal profits into mainstream commerce. Too often, corrupt bankers are actively or passively complicit. If we can stop the bankers, we throw a huge wrench into the cartels’ ability to function.

For decades, law enforcement has valiantly fought drug smugglers but to little avail. Consider this 2024 statement from the U.S. Treasury:

During the assessment period, Clan del Golfo (CDG), a Colombia-based TCO and paramilitary organization, remained a significant producer and trafficker of cocaine destined for U.S. drug markets and earned a significant amount of proceeds in U.S. dollars. According to the DOJ, CDG is one of the most violent and powerful criminal organizations in Colombia, and it is one of the largest distributors of cocaine in the world.

Mostly, America’s fight against the cartels has been done using a tactical troops on the ground approach that sends some of the most vicious cutthroat criminals to prison. However, the bankers who knowingly handle the cartels’ money rarely pay a price. And it’s a lot of money: “The United Nations Office on Drugs and Crime estimates between 2 per cent and 5 per cent of global GDP—up to $2 trillion—is laundered every year.” According to a DEA agent, the cartels are “undermining [America’s] financial stability.”

Image created using ChatGPT.

However, rather than prosecute the bankers, the Justice Department has invoked a system of Deferred Prosecution Agreements that let corrupt bank officials slide by having the bank pay a cash penalty. Thus, last fall, TD Bank paid up:

TD Bank will pay more than $3 billion in penalties after admitting that it failed to adequately guard against money laundering as well as violations of the Bank Secrecy Act, federal authorities said Thursday.

Over a nearly 10-year period dating back to 2014, TD Bank had "long-term, pervasive and systemic deficiencies" in its anti-money laundering policies and controls, according to legal documents cited by the Department of Justice.

TD Bank, which is the 10th largest bank in the U.S., failed to take action despite government regulators and the company's own internal auditors repeatedly pointing to potential issues with its procedures to detect suspicious transactions, the agency said.

Even though bank officials seemingly knew or should have known what was happening, none were charged:

[No] individual banker was charged. Whether the Justice Department’s continuing investigation of officers, directors and employees of TD Bank will result in actual people rather than just the banks themselves being criminally charged for these crimes remains to be seen. Until that happens, however, there is no reason to think that banks will not continue to find money laundering good business.

One individual who is not impressed with the Deferred Prosecution Agreement strategy for TD is former DEA agent Robert Mazur, who insists that drug traffickers and the shady banks that launder their profits both need to be put in prison.

In the late 1980s, Mazur and his fellow DEA agents worked for two years to form a sophisticated cover as a corrupt businessman involved in operating a slew of cash-flow businesses, including an investment company, a mortgage brokerage business, an air charter service, a jewelry chain, and even a stock brokerage firm with a seat on the NY Stock Exchange.

With the phony credentials in place, Mazur risked his life to successfully infiltrate some of the world’s largest and most ruthless drug cartels. He also used his phony credentials to ingratiate himself into the private client division of the Bank of Credit and Commerce International (BCCI) and established how BCCI executives manipulated complex international finance systems to help drug lords, cutthroat arms dealers, and corrupt politicians launder money.

In 1988, after he amassed sufficient evidence, a series of raids were launched that led to the arrests and convictions of more than 80 drug traffickers as well as a dozen BCCI executives. Since then, Mazur has never lost sight of the fact that bankers make cartels possible.

In an interview last March, Mazur explained that the FinCEN division of the Justice Department confiscates about one billion dollars each year from their deferred prosecution agreements with crooked banks. However, while a billion is a lot of money, when compared to the dirty money flowing to cartels hands—against, up to two trillion dollars—it’s a paltry amount, making the confisciations almost meaningless.

That’s why, after the TD deferred prosecution went public, Mazur noted it wasn’t enough. In an article entitled “Want to crack down on Drug Cartels? Go after the Money Launderers” he wrote:

Dirty banks and other launderers play a critical role in organized crime. They convert mountains of cash into bank balances that create businesses camouflaged as legitimate concerns. The corruption runs deep.

[snip]

If we want to get serious about identifying and prosecuting real money launderers and corrupt bank officials, we shouldn’t worry so much about every tiny money laundering risk that might exist. Instead, we need to keep prosecutions simple, deal with the real issues, and put corrupt bank managers, executives, and lawyers in prison. They facilitate the success of cartels, and they are just as responsible for fentanyl and other drug deaths as the pusher that sells lethal drugs to your kids. Without the money laundering professionals, the traffickers cannot hide, and dirty launderers cannot create a veil of plausible deniability.

But still, bankers aren’t jailed. Martin Armstrong, the economist, explains why they operate with impunity:

It is very simple and the shareholders are the ones who are being defrauded. The banks can routinely engage in fraud all they want. The individuals are NEVER prosecuted because the government knows they will not get huge fines from an individual. The bank is fined and pays vast amounts of money, but the bankers themselves are never prosecuted.

And without consequences, as Jack Kelly wrote in Forbes, the individual actors have no incentive to change: A September 2020 article from Forbes supports Mazur:

“The bankers will never learn until you start putting silver bracelets on people,” said Paul Pelletier, a former senior U.S. Justice Department lawyer. “Think of the message you’re sending to repeat offenders.” Thomas Nollner, a former regulator with the Office of the Comptroller of the Currency, stated, “These guys know what they’re doing. You break the law, you should go to jail, period.”

Over the decades, Congress has passed a slew of anti-money laundering acts that have helped to identify dirty bankers. The problem is that, once they’re caught, corrupt banking executives avoid being sent to prison. If the war on drugs is to cease being more than just a mere slogan, that has to stop.

Source link