ML by Banks: Too Big To Jail

One component of supposed “War on Terror”, we were assured, was to be the war on shadowy drug money, trafficking money, illicit money, extortion money, or bribe money, which licitly flowed through formal banking system unchallenged, secure in the knowledge that money is money, it carries no stains. International banking system acted like a giant laundromat that washed the “dirty money” squeaky clean and turned in “snow white”. The war on terror advocates saw a tight coupling between “terror finance” and “dirty money”. A flurry of agencies got to work and number of laws/ conventions were put in place to tackle this menace on war footing: Financial Action Task Force “The renewed mandate will allow the FATF – through its global network of 187 partner countries – to ensure that all are doing their part to make the international financial system off-limits to criminals, terrorists and others threats to financial stability“, Basel Committee on Banking Supervision “The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide“, International Association for Insurance Supervisorsthe vulnerability of the insurance sector with respect to money laundering and terrorist financing and provides case studies on money laundering. It presents measures and procedures to control these risks, including customer due diligence. It also provides guidance to the supervisor in monitoring compliance with AML/CFT standards and stresses the need for cooperation with other organisations involved in AML/CFT“, International Money Laundering Information Networkan Internet-based network assisting governments, organizations and individuals in the fight against money laundering and the financing of terrorism. IMoLIN has been developed with the cooperation of the world’s leading anti-money laundering organizations. Included herein is a database on legislation and regulations throughout the world ( AMLID), an electronic library“, International Monetary FundAnti-Money Laundering/Combating the Financing of Terrorism (AML/CFT)“, UN ANTI-CORRUPTION CONVENTION AND MONEY LAUNDERING, and so on. The legion is pretty impressive even if purely judged by its scale, leave alone the reputations of individual organizations that belong to world’s who’s who list. With white house egging on relentlessly to do more to combat terror, the results of “Operation-Clean Banking” should have to be impressive too.
The dictum of Too Big Too Fail from financial crisis has high-jacked theAML/CFT discourse too with its own version of Too Big To Jail. Instance after instance, the big names in international banking and finance, have been found to willfully ignore or even connive to subvert the AML/CFT laws and conventions.  HSBC, Citigroup and UK-headquartered Standard Chartered Bank have all reached “settlements” with US authorities over alleged money-laundering compliance failures. Each one got away with a piffle fine, rap on the knuckle, and a friendly warning. The latest to join the “elite league” is JP Morgan Chase, the largest of them all. Obviously, names that have not made to the list yet, are merely due to the fact that they are presumed ‘innocent” until caught.
The crimes of which they are accused are pretty serious business. ^^^Over the years, JPMorgan Chase and its corporate forebears have been accused of serving as conduits for money controlled by drug smugglers, mobsters and political despots and acting as magnets for “flight capital” from rich tax dodgers from Latin America and other regions. The bank also played a part, lawsuits alleged, in massive tax haven-enabled frauds in the Enron and Madoff scandals. Criminals and connivers rely on easy access to banks in the U.S., the UK and other rich nations to hide their assets from investigators and tax collectors and shift money in and out of offshore hideaways. Without this access, their shell games wouldn’t be possible^^^. HSBC agreed in December to pay more than $1.9 billion to settle an investigation into evidence it shifted cash for rogue nations, terrorists and Mexican drug lords. These amounts may look big to us, but these are small change for the banks, who have profited hugely from these financial crimes. Smaller offenders would have found themselves in jail for life for smaller crimes. They do. Read the whole report on JP Morgan Chase’s shenanigans here.

When such is the reputation of banking system at the heart of empire -United States of America- whose two administrations have shown untiring zeal to wage wars without borders or shelf-life, the periphery would be hard pressed to clean itself. Cobra Post disclosed in March the results of its sting operation on ICICI, HDFC, and AXIS bank – the big three of private banking in India. Reserve Bank of India, which is the principal “drainage inspector” for banking sector in India showed little alacrity or determination to nail the culprits “It would  be a complete travesty if the CobraPost sting on India’s three biggest private banks HDFC Bank  , Axis Bank   and ICICI Bank   ends up stinging either the wrong people or some scapegoats. RBI Deputy Governor KC Chakrabarty, not known for verbal discretion at the best of times, said “there is no scam (that) has happened…as no transaction has taken place.” The BusinessLine quotes him as going further and giving the entire system a clean chit: “Let us not unnecessarily downgrade ourself. Our system to prevent money laundering is perfect, absolutely nothing (wrong with it).”“. A typical Indian establishment’s reaction -keep on denying that anything is wrong until shit is undeniably all over. There may have been a quiet jubilation in some quarters that public sector is not involved, so what even if due to a legendary culture of lethargy and disincentives. That pleasure did not last long. The veritable muster of public sector banks is caught in the sting- Just to name a few: State Bank of India, Bank of India, Bank of Baroda, Punjab National Bank, and even the non-bank Life Insurance Corporation of India. In each case Cobra Post reporter used the most readily believable ruse -it was a politician’s “black money” that is to be laundered. No one batted an eye. The willingness to dilute “know Your Customer – KYC” norms or to provide large bank lockers to stash cash was absolute. Some even offered to provide currency counting machine to verify the quantum of cash, which  was to purportedly come straight to the bank from the fellow paying bribes to the unnamed politician. A sordid state of affairs, but not shocking in a country where law minister is caught red-handed secretly tampering a Central Bureau of Investigation report and where CBI’s director lies on oath that “political executive” has not seen the report; and Railway Minster’s nephew is caught accepting a bribe from a top level Railway official for fixing a lucrative posting and he merely “distances” himself from his relation. Now that the Congress party has “won” Karnataka elections, the Central government would tom tom it as people’s endorsement of its corrupt ways. Flagrant behaviour is concealed with great sophistry at the heart of the empire, but dirty linen can be washed at the periphery with gay abundance in the open.
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