Gadaffi's Stash - Money Laundering - U.S. MegaBanks - Business as Usual

The Hound : What a wonderful country our home has turned into; where we support Dictators for oil. I would have never thought that I would be begging to see some form of cogent justice, but it is very apparent that we are going to fully support a two-tiered society where it is legal to be a criminal, if you have control over someone else's money. We don't need more regulation, when the laws we have are brazenly usurped or altogether egregiously ignored and law enforcement is either bought off or incompetent (probably a little of both).

How Did Gaddafi Bypass US Anti-Money Laundering Rules To Bank With Goldman And JPMorgan? - Submitted by Tyler Durden - 03/02/2011

One of the most critical questions that has to be asked in light of yesterday's revelation that among the banks providing banking and asset amangement services for Libya were Goldman Sachs, JP Morgan and Citigroup, is just how did Libya get an exemption for anti-money laundering provisions both in Europe and the US. Oddly enough, this future mainstream debate arises not in the US, where any form of critical thinking appears to be immediately curbed by SEC Rule 201 (for all those calling for a hike in the SEC's budget, we suggest the following contrarian thought experiment: let's cut its budget to zero and see how long before anyone notices) , but out of the UK, where a reader writes in to the FT (oddly enough, partially owned by the Libyan Investment Authority) with the following very simple question: "It seems to me entirely implausible that Col Gaddafi could have earned billions of dollars through legal means. And yet if the AML procedures, to which we are all subjected, have not been applied rigorously to the likes of Col Gaddafi and his family, one is forced to ask what purpose they really serve." Or what purpose any regulation serves in general when fraud results in surging stock prices, and companies that adhere to the rules are promptly wiped out in this bizarro capitalist world.

From the FT:

Sir, I read with interest the news that the UK government is freezing billions of dollars in assets belonging to Muammer Gaddafi and his family. I would also be intrigued to know whether the banks and other financial institutions handling these assets have applied the same anti-money laundering (AML) procedures to these assets as are applied to every other “normal” banking client in the UK.

I am less interested in whether Col Gaddafi and his family were able to supply passport copies and utility bills but more interested in what evidence they were able to present as to the source of the funds.

It seems to me entirely implausible that Col Gaddafi could have earned billions of dollars through legal means. And yet if the AML procedures, to which we are all subjected, have not been applied rigorously to the likes of Col Gaddafi and his family, one is forced to ask what purpose they really serve.

Charles L.M. Horner,
Bangkok, Thailand

See No Evil: Wall Street Banks and Qaddafi Cash - Rolling Stone - By Tim Dickinson - March 2, 2011

The Obama administration's move to freeze $30 billion in Libyan assets has sent Wall Street banks scurrying to lock down Qaddafi's cash. Raising the question: How did America's biggest firms become bankers to one of the world's most corrupt men?

Anti-money-laundering statutes are supposed to bar "the movement of illicit cash or cash equivalent proceeds into, out of, or through the United States [or] ... United States financial institutions.” And when it comes to Libya, there's no such thing as licit cash: According to a WikiLeaked State Department cable: "Libya is a kleptocracy in which the regime has a direct stake in anything worth buying, selling or owning."

And yet, according to a cable from 2010, top U.S. banks were in bed with Qaddafi's Libyan Investment Authority: "Several American banks," our embassy in Tripoli reported, "are each managing USD 300-500 million of LIA's funds."

Firms reportedly playing banker to Libya's "sovereign wealth fund" include Goldman Sachs, Citigroup, JP Morgan Chase, and several private equity firms.

Banks Financing Mexico Gangs Admitted in Wells Fargo Deal - Bloomberg - June 28, 2010

They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.

The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

JPMorgan's $907 million Madoff bonanza - Posted by Colin Barr - February 28, 2011 - A new academic paper estimates the bank reaped nearly $1 billion in pretax profits over two-plus decades by servicing a checking account at the center of the giant Ponzi scheme.