[Corp. Watch] Big Greed's other organized crime: Money-laundering

[Corporation Watch]

Were Big Banks Fools or Knaves in WMD Conspiracy?

  by Phil Mattera

(Dirt Diggers Digest, April 7) -- The big U.S. banks have been accused  
of helping bring about the near destruction of the world financial  
system. Now, according to an indictment just announced by Manhattan  
District Attorney Robert Morgenthau, the banks also played a role,  
ostensibly unwittingly, in a conspiracy involving the proliferation of  
actual weapons of mass destruction (WMDs).

	Morgenthau brought a 118-count indictment against Chinese national Li  
Fang Wei and his metallurgical company LIMMT for conspiring to deceive  
half a dozen major U.S. banks into transferring funds used in the sale  
of banned weapons material to the Iranian military.

	The banks are JP Morgan Chase, Bank of New York Mellon, Citibank,  
Bank of America, Wachovia and American Express Bank.

	The banks themselves were not charged, but it is remarkable how  
easily they were duped by Li, whose company had been placed on a  
Treasury Department blacklist in 2006 because of its dealings with the  
Iranians, which allegedly included the sale of components for long- 
range missiles capable of delivering WMDs.

	Morgenthau's press release says that "U.S. banks employ sophisticated  
anti-fraud and anti-money laundering computer systems to detect  
illegal payments from sanctioned entities and people."

	Yet it seems that all Li had to do to circumvent that system was to  
tell his customers that the English-language name of his firm had  
changed (he used dubious aliases such as Blue Sky Industry  
Corporation). In some instances he did not even bother to change his  
telephone and fax numbers.

	Morgenthau went out of his way to exonerate the banks, but he  
couldn't resist mentioning that there are "parallels" between the  
LIMMT case and his office's ongoing investigation of "stripping," a  
practice in which banks remove identifying information from wire  
transfers to enable clients to avoid restrictions on transactions  
involving countries under U.S. sanctions.

	In January, Morgenthau's office announced that British bank Lloyds  
TSB would pay $350 million in fines and forfeitures in connection with  
a deferred prosecution agreement involving the practice. Lloyds was  
accused of helping Iranian and Sudanese clients circumvent the  
Treasury blacklist.

	Is it possible that by alluding to the Lloyds case, Morgenthau was  
hinting that the banks in the LIMMT matter were not purely innocent  
parties?

	After all, there have been numerous other cases in which large banks  
have been accused of helping shady clients by failing to enforce rules  
designed to thwart money laundering.

	For instance, a decade ago Citibank was accused of doing nothing to  
stop the brother of Mexico's former president from transferring large  
sums allegedly linked to drug smuggling and influence peddling.

	In 2004 Japan ordered the closure of Citi's private banking  
operations in that country for violations that included a failure to  
implement money-laundering prevention procedures.

	In 2007 the National Association of Securities Dealers (now the  
Financial Industry Regulatory Authority) fined a securities subsidiary  
of Bank of America $3 million for violating anti-money laundering  
rules in failing to collect adequate information on certain high-risk  
accounts.

	The banks may have been the fools in the LIMMT case, but they have  
often been knaves when it comes to the enforcement of international  
banking rules that may stand in the way of profit.