U.S. banks launder illicit fortunes

Does the U.S. economy depend on drug money and other criminal profits? A professor at Binghamton (N.Y.) University cites the findings of congressional investigators.

Sen. Carl Levin said; “Estimates are that $500 billion to $1 trillion of international criminal proceeds are moved internationally and deposited into bank accounts annually. It is estimated that half of that money comes to the United States.”

According to Professor James Petras, that means that over a 10-year period between $2.5 and $5 trillion in illicit funds have been laundered by U.S. banks and moved through our financial system. Petras says Sen. Levin’s statement does not take into account illegal transfers and capital flows from corrupt politicians, or tax evasion by corporations headquartered overseas.

A U.S. scholar and authority on international finance, affiliated with the Brookings Institute, estimates “the flow of corrupt money out of developing (Third World) and transitional (ex-communist) economies into Western coffers at $20 to $40 billion a year, and the flow stemming from mis-priced trade at $80 billion a year or more.”

Petras said his lowest estimate is $100 billion a year from those means, and including other elements of illegal capital would produce much higher figures. The Brookings expert’s estimates did not include illegal shifts of real estate and securities titles, wire fraud and other capital transfers.

In short, an incomplete total of dirty money moving into U.S. channels in the 1990s was between $3 trillion and $5.5 trillion. It is merely an indicator of how significant this illegal financial flow is to our economy.

Petras puts it this way: “Without the ‘dirty money’, the U.S. economy external accounts would be totally unsustainable, living standards would plummet, the dollar would weaken, the available investment and loan capital would shrink, and Washington would not be able to sustain its global empire.”

Former banker Antonio Geraldi, testifying before a Senate subcommittee, projected significant increases in money laundering by U.S. banks. He said: “The forecasters also predict the amounts laundered in the trillions of dollars and growing disproportionately to legitimate funds.”

Dirty money flowing into and through the major U.S. banks far exceeds the net

revenues of all internationally traded U.S. companies, not to mention their profits.

These annual amounts surpass all net transfers by major U.S. oil producers, defense contractors and airplane makers. The largest banks, especially Citibank, get a high percentage of their banking profits from handling these criminal accounts, Petras said. They prop up American global power by their money laundering and managing of illegal monies obtained overseas.

The government and the national media have portrayed the U.S. as being in the forefront of the war on drugs and political corruption. The image is that of clean hands fighting dirty money. The truth is completely the opposite.

Congress has conducted many hearings and detailed the banks’ illegal practices. It has passed laws and demanded stricter enforcement by public regulators and private bankers, but the shady practices continue. Why? Because these methods furnish high profits and support an otherwise fragile empire.

There are two important things to note about money laundering. First, it is done by the biggest and most important banks in the country. Secondly, the bank officials involved in it have the approval and encouragement of the highest levels of these institutions.

Petras said the biggest money launderer is Citibank—owned by the Rockefellers. It has 180,000 employees in 100 countries with $700 billion in known assets and more than $100 billion in secret accounts.

When Citibank laundered the $200 million account of Raul Salinas, brother of Mexico’s former president, his private bank manager at Citibank told her associates that “this goes in the very, very top of the corporation, this was known … on the very top. We are little pawns in this whole thing.”

Big banks use two methods to launder money. They are private banking and correspondent banking. Private banks use code names for their accounts and concentration accounts, which mingle bank funds with dirty money, which breaks the paper trail of wire transfers and disguises the movement of funds. They also employ offshore private investment corporations (as Enron did) in countries with strict secrecy laws, like the Bahamas, Cayman Islands and others.

Big bank money laundering operations have been investigated, audited and legislated against, but they continue unabated, and the government ignores the non-compliance.

Petras observes: “The increasing polarization of the world is embedded in this organized system of criminal and corrupt financial transactions. While speculation and foreign debt payments play a role in undermining living standards in the crisis regions, the multi-trillion dollar money laundering and bank servicing of corrupt officials is a much more significant factor, sustaining Western prosperity, U.S. empire building and financial stability.

“The scale, scope and time frame of transfers and money laundering, the centrality of the biggest banking enterprises and the complicity of governments, strongly suggests that the dynamics of growth and stagnation, empire and recolonization are intimately related to a new form of capitalism built around pillage, criminality, corruption and complicity.”

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