There are further concerns today over links between the legacy financial system and organized crime. Their warnings came after Rabobank was fined $368 million USD for laundering money for Mexican drug cartels.
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Rabobank Laundered Cartel Drug Money, Blocked Investigation
The BBC reported the California unit of the Dutch multinational bank agreed to pay $369 million to settle a U.S. investigation into its deliberate ignoring of illegal activities. It was the third time Rabobank has received sanctions for such crimes, and the company’s employees also attempted to obstruct the latest investigation.
Despite receiving multiple warnings over large transactions by “high risk” customers near the Mexican border, Rabobank created over a thousand “verified” accounts that would not the subject to the usual scrutiny, and allowed criminals to use them.
This criminal activity, masquerading as legitimate business transactions, raises concerns the legacy financial system may be dependent on organized crime money to supports its profits. Members of the Bitcoin community also expressed their feelings:
Huge fine for money laundering for Rabobank, but continues to say bitcoin is for money laundering. Pot meet kettle
— JPK (@bitcoinunitesus) February 9, 2018
Banks Regularly Fined Over Criminal Connections
The warnings about illegal activity surrounding the world’s banks are the latest in a string of penalties imposed on institutions using regular fiat currencies to process billions in criminal gains. The penalties were mainly financial, with few (if any) individual bad actors receiving prison sentences for the crimes.
Former Rabobank vice president and “compliance officer” George M. Martin reportedly made a plea deal over his role in blocking the money laundering investigations. The deal, which sees Martin cooperate with authorities, will delay his prosecution for two years. It’s not known whether he will receive a custodial sentence.
Deutsche Bank received a $630 million fine in January 2017 for laundering money for Russian organized crime gangs through London. Wachovia bank paid $160 million in 2010, while HSBC paid a whopping $1.9 billion in 2012. Citibank was fined $70 million in January 2018 over anti-money-laundering (AML) compliance failings, while in Australia crime syndicates managed to acquire whole franchises of mid-tier banks.
Not Just Legacy Banks but Fiat Currency Itself is Risky
It’s not only association with organized crime that should worry the public about the legacy financial system. The currency unit itself has a constantly declining value and most advise against holding it in bank accounts for long periods of time.
Economics think tank The Mises Institute has also warned that fiat currencies, the preferred exchange medium of drug cartels, corrupt officials and legitimate banks, actually have no intrinsic value.
Though the U.S. dollar (and through it most other world currencies) was theoretically backed by gold until 1971, President Nixon severed the final link and declared the USD would be “backed” merely by a promise from there on. Its purchasing power dropped by 80 percent from 1971 to 2006 and much more after that, as successive governments printed units to fund economic stimulus measures, destructive wars and bailouts for legacy banks that failed in 2008-09.
Do the legacy financial system’s dependence on crime and unsupported value present a threat to the world economy? Let us know in the comments.
Images via Rabobank, Wikimedia Commons