Bankers getting a legal high from the authorities’ unwillingness to prosecute
Opinion: It is highly implausible that branch managers were unaware that they were being used to launder drugs money
The law against marijuana was lifted in Colorado on January 1st, bringing possession of a $10 bag of pot into the same category as laundering hundreds of millions for drugs lords. That is, no prosecutions.
The no-prosecution policy for banks facilitating the dealings of Mexican and Colombian drugs cartels applies in all US states. At Senate hearings last May, Elizabeth Warren (Democrat-Massachusetts) tried to coax answers to this conundrum from high-ranking financial regulators.
Referring to the role of the British-based HSBC in facilitating the drugs cartels by transferring huge sums from its Mexico branches to banking institutions elsewhere where its origins couldn’t or wouldn’t be traced, she asked treasury under-secretary David Cohen: “How many billions do you have to launder for drugs lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
(HSBC had also been zinging billions around the world on behalf of Iran, Cuba, Sudan, Libya and Burma in periods when any dealing with these countries was – ludicrously – forbidden under anti-terrorism measures.)
Pressed repeatedly, Cohen responded that the treasury thought it more appropriate to regulate than to prosecute – not that there had been much regulation – and, anyway, it didn’t have power to initiate court action. Cohen seemed to have difficulty understanding that this wasn’t an answer to the question she had asked.
Next up was Jerome H Powell for the Federal Reserve. The Fed could only shut down a bank if there had been a criminal conviction, he declared. But no criminal charges had been brought, said the senator. Quite so, agreed the spokesman for the guardian of the nation’s finances.
Did he have any advice for the department of justice as to whether HSBC ought to be prosecuted? He replied that it wasn’t the Fed’s role to advise on such matters, merely to answer any questions put to it, the implication being no such question had been raised.
“You know,” Ms Warren summarised, “if you are caught with an ounce of cocaine, the chances are good you are going to jail. If it happens repeatedly, you may go to jail for the rest of your life. But, evidently, if you launder nearly a billion dollars for drugs cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night, every single individual associated with this. I think that is fundamentally wrong.”