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Banking on corruption

January 24, 2011

According to MoneyLaundering.com on Jan. 18, an anonymous source says that bank officials from two major U.S. banks urged politicians in Afghanistan to open accounts with the banks, even though the banks knew that the politicians’ money came from illegal sources such as embezzled international aid, drug money, or hawala-transferred cash which violates know-your-customer requirements.

It would be one thing if greasy lawyers and financial advisers were privately telling crooked politicians how to deposit their illicit money offshore secretly.  But it’s quite another thing if banks themselves are telling prospective customers how to circumvent the very same compliance standards which they are supposed to enforce.  And if it’s true that the banks are courting Afghan plutocrats, what does that tell us about the banks’ possible activities in Iran, Sudan, etc?

Take their article with a grain of salt due to the anonymous sourcing, but MoneyLaundering.com is an informative site with reporting that’s usually spot-on.  The source is possibly a U.S. Department of Treasury or Department of Defense employee.  This doesn’t sound like a CIA or State Department leak.

U.S. Banks Helped Afghan Officials Launder Millions in Corrupt Funds: Source

By Colby Adams

U.S. officials believe that representatives of at least two major American banks agreed to help top Afghan officials disguise hundreds of millions of dollars in corrupt funds, according to a person familiar with the matter.

The banks, which are among the largest in the United States, maintained accounts for Afghan ministerial officials following meetings in Dubai and Kabul, despite knowledge that their deposits were likely embezzled from development funds or possibly the proceeds of drug trafficking, according to the individual, who reviewed intelligence data from multiple sources.

The U.S. bank officials “aggressively pursued the money in multiple conversations” and advised the Afghan leaders on how to circumvent anti-money laundering reporting requirements through structuring and other means, the person said.

Those strategies were “discussed by high-level U.S. banking officials in Kabul who coordinated with ministerial aides,” the person said. “The principals involved in the Afghan government were good about not directly taking part in the conversations.”

“Their discussions with the banks usually centered around keeping the money under certain thresholds, using certain offshore vehicles to move the money so it wasn’t always coming from the same place and changing remittance companies to obscure the trail,” according to the individual, who said that accounts were unearthed during investigations of Afghan officials.

While the investigations pinpointed two well-known U.S. banks, at least two other Western financial institutions also knowingly accepted corrupt funds from Afghan officials.

“I can say that with 100 percent certainty,” said the person, adding that the Afghan money was either transported in bulk or sent through hawala networks from Afghanistan to Dubai…

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