Drug Dealers 

Dump Dollar for Euro.

By Søren Nielsen July 08 2017.

I wrote a couple of weeks ago that the CIA is washing 500 billion in Wall Street per year, after it has been broadcast in the media, the something funny is beginning to happening with the dollar?

Criminals dumping weak US dollar for euro
The weakened US dollar has fallen out of favor with organized crime groups to pay for drug shipments or to settle scores.

And if the greenback continues its slide in 2008, as expected, more and more criminals are likely to exchange euros for illicit goods, said Criminal Intelligence Service.

"As a consequence, other currencies -- particularly the euro -- are poised to weaken the US dollar's dominance as the currency of choice for international remittances and payments,".

"This trend could also drive an increase in observed instances of bulk-cash transfers denominated in currencies other than Canadian and US dollars." 

Methamphetamine production in World, meanwhile, has risen to meet expanding international demand with several "super labs" set up for foreign distribution of late.


As well, Canada, the Netherlands and Belgium are now the primary source of ecstasy to the world.


90 tons of Cocaine.
If the American were questioned by the Internal Revenue Service or other authorities about the source of his wealth, he could point to his loan from a respected international bank. "Many of your largest corporations, many of your movie stars, do much the same thing here," says the banker. "We wouldn't want to handle criminal money, of course. But if it's just a matter of taxes, that is of no concern to us."

When U.S. drug agents tallied up the amount of cocaine they seized during fiscal 1989, their haul totaled 89 tons, or 44% more than last year's. The volume, which is believed to be only a small percentage of the tons flooding the country, is evidence of more than just a frighteningly effective drug- smuggling industry. The wholesale value of the coke, as much as $28 billion, is testimony to another kind of dark genius. This is the scandalous ability of the coke kingpins to launder billions of dollars in drug proceeds using many of the same financial services available to the FORTUNE 500. In a wash cycle that often takes less than 48 hours, the drug smugglers can turn coke-tinged $20 and $100 bills into such untraceable, squeaky-clean assets as money-market deposits, car dealerships and resort hotels.

The coke smugglers can accomplish this feat because they have plenty of help. They rely on a booming money-laundering industry that serves a clientele ranging from tax-avoiding corporations to the Iranscam schemers. The system depends on the collaboration, or often just the negligence, of bankers and other moneymen who can use electronic-funds networks and the secrecy laws of tax havens to shuffle assets with alacrity. The very institutions that could do the most to stop money laundering have the least incentive to do so. According to police and launderers, the basic fee for recycling money of dubious origin is 4%, while the rate for drug cash and other hot money is 7% to 10%.

Much is at stake as the powerful flow of narcodollars is recycled through the world's financial system. Drug lords and other lawbreakers are believed to be buying valuable chunks of the American economy, but clever Dutch sandwiches and other subterfuges make it almost impossible for U.S. authorities to track foreign investors. A case in point: blind corporations based in the Netherlands Antilles control more than one-third of all foreign-owned U.S. farmland, many of the newest office towers in downtown Los Angeles and a substantial number of independent movie companies producing films like Sylvester Stallone's Rambo pictures.

While businesses and individuals may conceal their assets for purposes that are completely legal, or dubious at worst, the systems set up for their convenience can be perversely efficient at helping drug barons launder as much as $100 billion a year in U.S. proceeds. "It is hard to understand why we failed for so long to institute adequate controls," says Massachusetts Democrat John Kerry, chairman of the Senate's Subcommittee on Terrorism, Narcotics and International Operations. The state of regulation is "so lackadaisical," says Kerry, "it's almost damnable."

President Bush, for his part, has declared money launderers a critical target in the war on drugs, allocating $15 million to launch a counteroffensive. While the sum is minuscule for the task, the declaration signals a change in philosophy for the Administration, which had resisted calls for tighter banking regulations. Only hours after Bush unveiled his antidrug offensive last September, a federal task force began taking shape. The Financial Crimes Enforcement Network (FINCEN) hopes to zero in on money launderers with computer programs capable of spotting suspicious movements of electronic money.

In a high-tech game of cat and mouse, the Justice Department said last week that it had found and triggered the freezing of $60.1 million in bank accounts in five countries that contained the personal income of Jose Gonzalo Rodriguez Gacha, a leader of the Medellin cartel. Using financial records and computer disks captured by the Colombian government, U.S. agents traced Rodriguez money to accounts in the U.S., Luxembourg, Switzerland, Austria and Britain.

Drug Enforcement Administration officials told TIME that one of Rodriguez's purported financial advisers, Panama-based Mauricio Vives, tried desperately to keep moving the money one step ahead of the agents. Vives called a British banker and told him to move several million dollars, fast, to an account in Luxembourg. If the bank were to delay, his Colombian client would kill him, Vives pleaded. The banker refused, and British authorities cooperating with the DEA froze the account. Not all countries were as helpful. U.S. agents said they tracked Rodriguez's money to the Cayman Islands, Spain and Montserrat, but local authorities said they could not cooperate, citing rigid bank-secrecy laws as an excuse.

What makes enforcement so difficult is a financial murkiness that has long frustrated tax collectors as they search for dirty money afloat in the world's oceans of legitimate payments. The multibillion-dollar flow of black money, the profits from criminal enterprise, moves through the world's financial institutions as part of a vastly larger quantity of gray money, as bankers call it. This dubious, laundered cash amounts to an estimated $1 trillion or more each year. Often legitimately earned, this money has an endless variety of sources: an Argentine businessman who dodges currency-control laws to get his savings out of the country; a multinational corporation that seeks to "minimize" its tax burden by dumping its profits in tax-free havens; a South African investor who wants to avoid economic sanctions; an East German Communist leader who stashed a personal nest egg in Swiss bank accounts; or even the CIA and KGB when they need to finance espionage or covert activities overseas.

The world's prosperity depends on a fluid and unfettered financial system, yet the lack of supervision is producing a large shadow economy. The IRS estimates that tax cheats skim as much as $50 billion a year from legitimate cash-generating businesses and launder the money to avoid detection. Banking experts calculate that the private citizens of debt-choked Latin American countries have smuggled more than $200 billion of their savings abroad in the past decade.

The money-laundering process, especially in the drug trade, begins with greenbacks. Much of the cash simply leaves the U.S. in luggage, since departing travelers are rarely searched. Larger shipments are flown out on private planes or packed in seagoing freight containers, which are almost never inspected. That explains, in part, why U.S. officials are unable to locate fully 80% of all the bills printed by the Treasury. Once overseas, the cash is easy to funnel into black markets, especially in unstable economies where the dollar is the favored underground currency.

But hauling cash out of the U.S. has its drawbacks. The interest revenue lost while cash is in transit pains a drug dealer as much as it would a corporate financial officer. And since narcotraffickers see America as a safe and profitable haven for their assets, they often launder and invest their cash in the U.S. The first and trickiest step is depositing the hot cash in a U.S. financial institution. Reason: the IRS requires all banks to file Currency Transaction Reports for deposits of $10,000 or more. During the early 1980s, launderers got around this scrutiny by employing couriers called Smurfs, named for the restless cartoon characters, who would fan out and make multiple deposits of slightly less than $10,000.

The Government now requires banks to keep an eye out for Smurfs, but launderers have developed new techniques. Since retail businesses that collect large amounts of cash are often exempt from the $10,000 rule, launderers have created front companies or collaborated with employees of such outlets as 7 Elevens and Computer-Land stores. To drug dealers, "an exempt rating is like gold," says a Wells Fargo Bank vice president. A restaurant that accepts no checks or credit cards can be an ideal laundering machine. Even a front business with no exemption is valuable because launderers can file the CTRs in the knowledge that they are unlikely to attract scrutiny, since the Government is swamped with 7 million such reports a year, up from fewer than 100,000 a decade ago. Other places where drug dealers can often dump their cash include the currency exchange houses along the Southwest border and urban check- cashing and money-transmittal stores.

Once the money is in a financial institution, it can be moved with blinding speed. Communicating with the bank via fax machine or personal computer, a launderer can have wire transfers sent around the world without ever speaking to a banking officer. The goal of many launderers is to get their money into the maelstrom of global money movements, where the volume is so great that no regulators can really monitor it all. Such traffic has exploded because of the globalization of the world economy, which has multiplied the volume of international trade and currency trading. On an average working day, the Manhattan-based Clearing House for Interbank Payments System handles 145,500 transactions worth more than $700 billion, a 40% increase in just two years.

Much of the electronic money zips into a secret banking industry that got its start in Switzerland in the 1930s as worried Europeans began shifting their savings beyond the reach of Hitler's Third Reich. Later the country's infamous numbered accounts became a hugely profitable business. Chiasso, a quaint Swiss town of 8,700 inhabitants on the Italian border, has 18 banking offices. But during the past few years, Swiss secrecy has been weakened by a series of cases involving money laundering. Switzerland is now preparing a new law that will make money laundering a crime punishable by prison terms. Explains Jean-Paul Chapuis, executive director of the Swiss Bankers Association: "Our hope is that the criminals will go to another country."


They apparently are, since many small countries have successfully attracted banking business by creating discreet, tax-free havens. In Luxembourg total bank deposits have grown from $40 billion in 1984 to more than $100 billion last year. In the wake of a drug-money scandal involving the Florida operations of Luxembourg-based Bank of Credit and Commerce International, the country has tried to burnish its public image by declaring money laundering a criminal offense, even while it has fortified its bank-secrecy rules.

As the financial center of gravity in the world has shifted toward the Pacific Rim, new tax and secrecy havens have multiplied on such remote islands as Nauru in the western Pacific and Palau and Truk in Micronesia. Citizens of Vanuatu, a volcanic archipelago of some 80 islands formerly known as the New Hebrides, have found that international finance beats coconut and taro farming. In Port Vila, the capital, it is not unusual for a $100 million transaction between major international banks to take place on any given day.

Still, Hong Kong remains the pre-eminent laundering center in the Pacific. Almost everyone there does it, usually legitimately, at least according to the laws of Hong Kong, where even insider trading is no crime. By the puritan standards of the U.S., says one American banker, "the lack of public disclosure here is scandalous." The city is a mecca for arms dealers, drug traffickers and business pirates of every description. "Where else could I broker a deal that involves machine guns from China, gold from Taiwan and shipments traded in Panama City?" says a Brazilian arms merchant who maintains an apartment in Hong Kong.

In the U.S. a money-laundering center can be spotted by the huge surplus of cash that flows into the local branch of the Federal Reserve System. In 1985 the Miami branch posted a $6 billion excess. But after several years of intense federal probes of South Florida banks, Miami's cash glut fell last year to $4.5 billion. Much of the business went to Los Angeles, where the cash surplus ballooned from $166 million in 1985 to $3.8 billion last year. Despite such rocketing growth, the staffing of federal law-enforcement offices in L.A. still lags far behind the levels in Miami or New York City.

Both in the U.S. and abroad, financial businesses and even governments are often reluctant to impose regulations to keep out launderers. One reason is that a thriving financial industry brings jobs and income. South Florida's 100 international banks employ 3,500 workers and pump $800 million into the local economy. Even more appealing is the inflow of foreign capital. During the spend-and-borrow era of the 1980s, the gusher of flight capital into the U.S. from Latin America helped finance America's deficits. As in Hollywood, not many politicians were concerned about where the money was coming from. Alarmed by the tide, House Democrat John Bryant of Texas has long pushed for legislation to require disclosure of the identity of foreign investors. But for years, the Reagan Administration refused to go along, claiming that such openness might scare away capital.

Now that a consensus is building that the U.S. must pick out the black money from the gray, the tools at hand seem minimal for the task. Says Jaime Chavez, an international banking consultant: "The people who will probably be searching for it have a very limited knowledge of what money movement is all about. How is a third-rate employee of the Justice Department going to dissect the entire financial system to pinpoint the drug money correctly?" During the Reagan years, the budgets of agencies in charge of ctaching financial cheats failed to keep pace with the changing world of money manipulation. Even IRS agents are largely unprepared for the task of tracking transactions that can involve four or five banks, several shell companies and two or more currencies.

Few agents can be spared because IRS employees are working overtime to contain an explosion of smaller-time money-laundering cases involving car salesmen, ordinary investors, real estate agents and other entrepreneurs. In Florida undercover IRS agents operating a sting operation that they touted as a "full-service financial-investment corporation" have nabbed 50 would-be money launderers in the past year. "Some are lawyers and businessmen who are skimming cash from their businesses, and they've heard about what you can do through an offshore bank," says Tampa IRS supervisor Morris Dittman. "Others have cash that rolls out of the drug trade. When a druggie buys a big home and car for cash, you have a real estate agent and a salesman with sudden cash, and they begin wondering if they have to share it with the Government."


Such amateurs are running afoul of laws that professionals have already discovered. The statutes began tightening in 1986, when money laundering became a specific crime. Later it became illegal to evade the $10,000 currency-reporting requirements by making groups of smaller deposits. Banks have begun to exercise more internal supervision as well, prodded by a series of investigations in the mid-1980s in which such institutions as Bank of America and Bank of Boston were forced to pay hefty fines for their involvement in laundering schemes. Yet many major banks are still participants, witting or not, in ever more sophisticated laundering operations.

The biggest problem may be in deciding how to handle all the borderline illegality the task force will find. "How do you separate drug money from capital-flight money?" asks one of the mavens. "It will be more than drug money we come up with, and what happens when we stumble over a really major company and hold up its dirty linen? Maybe the banks will start turning in the narcotics people rather than lose their biggest customers."

To make a dent in the money-laundering trade, authorities will need more support from the financial community. "They're now willing to tell us about people coming in with bags of cash," says a regulator, "but as far as anything else goes, you can forget it." Yet many bankers think the feds have become indiscriminate in their crackdown. "They are characterizing traditional, ordinary, international banking transactions as money laundering," gripes Gerald Houlihan, a Miami attorney who represents financial institutions in money-laundering and forfeiture cases. "They are not going after money launderers, but are attempting to terrorize banks in an effort to give the impression they are doing something about drugs."


U.S. bankers rightly point out that they must abide by relatively strict currency-reporting laws, while their counterparts in other countries play fast and loose. That discrepancy has prompted Washington to try to persuade the rest of the banking world to adopt the record-keeping system used by American institutions.

General Luigi Ramponi:
"Now that they are too rich, the drug lords will start investing everywhere: in industry, in the stock market." In the U.S. some lawmakers have begun worrying about the impact of billions of drug dollars invested in U.S. institutions and wonder what influence the drug barons might eventually exert.

That is the kind of attitude that has brought the system to its current state, in which drug money freely mingles with the life force of the world economy, like a virus in the bloodstream.