Dope Money III

When the House Banking Committee approved legislation last week designed to root out money laundering practices they missed a major point. The committee seems to have forgotten that much of the money-laundering problem is due to the practices of banks in the United States of America and not overseas. It may not be correct to state that the Committee members actually “forgot” about this blatant truth, but rather, pressure from the banking lobby was successful in getting committee members to avoid taking the steps necessary to put an end to some of the banking practices that make much of the international drug trade possible and profitable. Talk about a switch, what began in the committee as hearings to examine how Russians laundered money in the Bank of New York, inside of the U.S., ended with the committee aiming to give the U.S. Secretary of the Treasury more access to the financial records of banking transactions made abroad. At the outset, the practices of domestic banks like Citigroup, Bank of New York and Chase Manhattan were under the microscope, as the committee took aim at the culpability of U.S. Banks in the money-laundering problem. But by last Thursday’s hearing, the focus had become whether these banks and their U.S. customers were being treated unfairly by some of the proposed legislation’s provisions.

At the heart of the dramatic switch in the committee’s focus is the influence of the U.S. banking lobby that knows that money-laundering could not possibly exist unless bank employees and bank practices and regulations facilitated it. They also know that technically, the U.S. Government has the authority to revoke the charter of banks that are involved in money laundering. But they also know that the Treasury Department is more than hesitant to do so. If it weren’t for Rep. Maxine Waters (D-Ca.) reminding the Treasury Department of its authority to take bank charters away, one can only wonder if the subject would ever come up.

Thus far the banking committee has been successful in decoupling the practice of money-laundering from the banks that facilitate it. Under the RICO statute such decoupling isn’t possible for small business owners and even religious organizations that have been convicted of the laundering of drug money but it is a whole other story when the profits from drug sales travel through the accounts of some of America’s largest banking institutions like Citigroup. Then all of a sudden the government forgets about RICO and connecting the dots. We gather it doesn’t hurt to have the former Secretary of the Treasury, Robert Rubin, as one of your executives (only a few months after he left his position as United States Treasury Rubin took a job at Citigroup, a bank he used to regulate) when your bank is under investigation for possibly helping drug dealers launder money through its system. Yet we are all told that there is no conflict of interest between a Clinton Justice Department investigation of an institution headed by a former Clinton Administration official. Go figure.

So, in only 10 months the banking committee took its eyes off of the role that U.S. banks play in the laundering of money inside of America and placed its attention on the rest of the world. We guess that’s why the Act is called "International Counter-Money Laundering and Foreign Anticorruption Act of 2000". Chalk another victory up to the international drug trade and the banking lobby.

Cedric Muhammad

Monday, June 12, 2000