Wednesday, August 31, 2011

A Renewed Focus on Drug Cartel Money Laundering

"The authorities uncovered billions of dollars in wire transfers, traveller's cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme." - http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

During the financial crisis of 2007 and 2008, many banks were made more vulnerable to money laundering activity. Although Wachovia and other banks were subject to a number of regulations directed at preventing money laundering, such as the Bank Secrecy Act, many of these firms had growing problems that were, at the time, more cause for concern.

When an organization could seriously use an influx of cash to avoid insolvency, hundreds of millions of dollars in questionable deposits can have a tendency to become a whole lot less questionable.

Of course, authorities eventually did launch an investigation that resulted in Wachovia being fined $110 million for allowing the transactions, with an additional $50 million fine levied for not monitoring funds that were used to ship 22 tons of cocaine. Of course, these finds are dwarfed by the hundreds of billions of dollars the bank had transferred without the proper restrictions, between United States and Mexico based accounts.

In much the same way that the recent financial crisis has brought about an increase in public pressure to better-regulate the financial industry, exposes of large-scale laundering activity by drug cartels is sure to bring a renewed focus on ensuring the banking industry is doing more to prevent the system from being used for money laundering.

Peter J. Scuderi is a Philadelphia Money Laundering Lawyer with experience representing clients charged with money laundering. Because of the increased focus on bringing legal action against those suspected of money laundering, many individuals have found themselves as a target of laundering investigations.


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