Two weeks ago, a Wells Fargo banker pleaded guilty to money laundering. He helped members of drug cartels launder money and transfer it to Mexico. One of those cartels is the Sinaloa Cartel.
Several years ago the U.S. intelligence community labeled the Sinaloa Cartel the most powerful drug trafficking organization in the world. Whether or not they still hold that title today isn’t the subject of this post. We don’t seek to glorify criminal cartels.
The importance of the story is the number of U.S. and international banks helping narcoterrorists. Are we shocked by Wells Fargo involvement? We should be but sadly we are not. And they aren’t alone.
Banks like Wells Fargo reward employees who bring in large customers and accounts. There are strict anti-money laundering (AML) rules that apply to banks but many banks turn a blind eye. As long as the money is green, senior bank managers don’t want to ask too many questions.
According to the Justice Department, “[Luis Fernando] Figueroa, as a personal banker with Wells Fargo, admitted in his plea agreement that he knowingly opened personal bank accounts at Wells Fargo for the funnel account holders, knowing that those personal accounts would be used to launder funds to Mexico.”
San Diego’s U.S. Attorney said, “We can’t allow our banks to be laundromats for cartel cash. Bank employees who launder drug money for traffickers will face prosecution and prison.”
What about the banks?
In fairness to Wells Fargo, they were not charged in the criminal indictment. They can (and should) still be held responsible for violating AML rules including due diligence and know your customer rules.
In 2012, HSBC paid a $1.9 billion fine for helping Mexican drug cartels use their bank to launder money. According to Reuters, Mexican drug lords said that HSBC was the “place to launder money.” In many instances the laundering activities weren’t even sophisticated. People would come in with large sums of cash, deposit the money, and then wire it elsewhere. No questions asked.
The bank entered into a deferred prosecution agreement and was on probation for five years. That probation ended in 2017. Months later the bank was named in another investigation, this one about money laundering involving funds allegedly stolen from South African government enterprises.
Last year, the California affiliate of Dutch banking institution Rabobank paid $369 million to settle allegations that it assisted Mexican narcoterrorists launder money. The money passed through small Rabobank branches along the Mexican border.
Unlike HSBC, which was given a deferred prosecution, Rabobank pleaded guilty to one count of conspiracy to defraud the United States. Prosecutors say that charges stem from efforts by the bank to cover up the money laundering when regulators began asking questions.
Wachovia Bank (now part of Wells Fargo) was implicated in a multi-billion dollar bank money laundering scheme. Apparently Wachovia allowed $378 billion to transfer through its bank.
According to the Guardian, “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank’s $12.3bn profit for 2009.”
If there is any good news, the Wachovia case was the first. Since then the feds have become a lot tougher on banks that launder money for criminals, cartels and terrorists.
Whistleblowing Rewards for Bank Money Laundering Information
But the feds can’t audit every transaction at every bank. That is where whistleblowers come in. And under U.S. law, whistleblowers who report certain bank misconduct can earn awards of up to $1.6 million.
Drug cartels make tens of billions of dollars each year by selling their products in American cities. Lives are lost, families ruined and the crime necessary for drug addicts to fund their addictions soars.
We lock up young drug dealers for decades in an effort to “get tough on crime” yet the banks are equally culpable for this vicious cycle of ruined lives and communities. The cartels can’t operate unless they get their money. And transporting that much in cash is too difficult. So they enlist bankers who work at banks willing to turn a blind eye.
Thus far we have discussed the role of big institutions in bank money laundering… Wachovia, HSBC, Rabobank and America’s least liked bank, Wells Fargo. It’s not just the big banks, however.
In 2014 the Financial Crimes Enforcement Network (FinCEN), an arm of the Treasury Department, fined a small North Dade Community Development Federal Credit Union in Miami. The tiny credit union had just five employees yet was processing transactions through a third party vendor in Central America, Mexico and the Middle East.
According to regulators, in just one year the total transaction volume through North Dade by included $1.01 billion in outgoing wires and $984 million in remotely captured deposits.
According to a FinCEN release,
“When a small institution opens its doors to the world, takes on greater risks than it can manage, and puts profits before AML controls, bad actors are bound to take advantage. This case raises pretty obvious questions that no one seems to have asked. Why would [money service businesses] located all over the world choose a small Florida credit union to conduct close to $2 billion in transactions? Credit unions pride themselves on close and low- risk relationships with known neighborhood customers. However, North Dade welcomed customers far beyond its field of membership, without adequate policies and procedures to ensure AML compliance.”
We don’t think the recent prosecution of Luis Figueroa is the end of money laundering by banks or credit unions. When one door gets nailed shut, some other greedy banker inevitably steps up to the plate. And that is where you can help.
None of these bank huge money laundering operations should have gone on for as long as they did. In some of these cases, the laundering of drug money went on for years.
We don’t think for one second that most bank employees are dishonest. Bank tellers and compliance officers know the signs of money laundering when they see it. The fault lies higher up in the bank when warnings from employees are suppressed, ignored or countermanded.
The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) pays cash rewards to bank employees and others with inside information about a wide array of bank misconduct including bank money laundering. The awards are capped at $1.6 million but maximum awards are common.
[The Office of the Comptroller of the Currency and FDIC have discretionary authority to issue awards but those are quite rare. FIRREA rewards are controlled by the Justice Department and are more common.]
Congress Passes Anti-Money Laundering Act, Overrides Presidential Veto
Congress is serious about AML enforcement. By a two thirds supermajority, Congress overrode a presidential veto and passed the Anti-Money Laundering Act. Unlike FIRREA, rewards aren’t capped. Treasury can issue rewards of up to 30% of whatever the government collects from individuals, businesses and banks that violate the Bank Secrecy Act or AML regulations.
We especially like the law since unlike Dodd – Frank, compliance officers and auditors are eligible for rewards.
If you have inside information about bank misconduct, speak up. We can help you earn a cash reward and stop the fraud. Thousands of people are dying on the streets of both Mexico and the United States. Whether it is drug cartel violence in Mexico or drug overdoses here, we can at least stop the banks from making it easier for these murderous gangs to launder their ill-gotten gains.
Drug Trafficking, Bank Money Laundering and SEC Whistleblower Rewards
And because bank holding companies are almost always publicly traded companies, SEC cash whistleblower rewards may also be available.
Why SEC whistleblower rewards? Publicly traded companies have a legal obligation to have proper books and records. They also can’t hide material risks from shareholders.
Finally, drug trafficking organizations and terrorist groups may be on the Office for Foreign Asset Control’s sanctions list. And companies have a legal obligation to report sanctions offenses. Failure to do so is also an SEC violation.
Whistleblowers – Part of the Solution
From our experience, 90% of all whistleblowers tried to fix problems internally before going outside and finding us. If your reports of AML and BSA violations are being ignored or if you suffered retaliation for trying to stop these transactions, call us. We can help.
It’s easy to say that someday the bank will be caught but that doesn’t always happen and there is no reason for this type of illegal behavior to continue for months or years. Bank auditors can’t be everywhere. Instead, regulators rely more and more on insiders like you to be their eyes and ears.
Our bank fraud whistleblower lawyers have the experience to take on big banks and get you the reward you deserve. (We have a former senior OCC and FDIC enforcement lawyer on our team.) To learn more, visit our AML money laundering and FIRREA whistleblower pages.
Think you may have a case or just have some questions? Contact us online, by email or by phone at (direct). All inquiries kept strictly confidential and protected by the attorney client privilege.