U.S. proves popular for money laundering

A man smokes outside the Standard Chartered bank's offices on Aug. 7, 2012 in London, England. Standard and Chartered has been accused by American financial investigators of making billions of pounds worth of transactions with the Iranian regime, despite strict economic sanctions being in place.

Kai Ryssdal: This has been -- by just about any measure you care to use -- a miserable, no-good, flat-out lousy year for global banks. JPMorgan lost $3 billion -- or was it $5 billion? -- on trades gone bad. Barclays got caught rigging LIBOR to the tune of a half-billion dollar fine and the hide of its CEO.

Now -- I kid you not -- money laundering. New York State has accused Britain's Standard Chartered bank of covering up $250 billion worth of deals with Iran. And that's just the latest trespass. Last month, the British Bank HSBC apologized for laundering Mexican drug money here in the States. In June, it was the Dutch bank ING paying $619 million for moving Iranian and Cuban money here.

With what one assumes is among the world's most sophisticated banking systems, why and how does that stuff happen in the U.S. of A? Marketplace's Sally Herships reports.


Sally Herships: Where do banksters, you know, bad guy bankers, want their money?

Mark Williams: Think of it this way. Laundered money flows like water. It’s going to flow to the course of least resistance, the weaker-controlled countries in which there’s money flowing.

That’s Mark Williams. He teaches risk management at Boston University. And he’s talking about the United States. Trillions of dollars flow through here and it can be hard for regulators to catch everything. And criminals look for seemingly reputable banks to disguise their money.

Kieran Beer is editor of MoneyLaundering.com.

Kieran Beer: You eventually have to go through the U.S. banking system to do dollar transactions. So many things have to be done in dollars.

Drugs. Weapons. Oil.

Beer: There was a time when we thought maybe the euro would become the currency of the world and that the rest of the world could move away from its dependence on the dollar, but as we’ve seen that hasn’t gone so well.

Which Beer says makes getting dollars and getting into American financial markets really important for everyone – sanctioned countries like Iran included. He says the federal government has been pushing to tighten anti-money laundering laws, but then there are states, like Delaware, Nevada and Alaska, where Beer says it’s easy to register shell corporations with very little transparency.

Beer: And it’s in the interest of states to say just come on, bring us your money. Do business with us and we won’t ask that many questions.

Like, why launder your money in the Cayman Islands when you hide it in plain sight here?

In New York, I’m Sally Herships for Marketplace.

About the author

Sally Herships is a regular contributor to Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...