Banks Profit From Drug Money

The UN Office on Drugs and Crime recently revealed something which was hardly reported at all: there are indications that some banks are surviving the financial crisis thanks to ‘inter-bank loans’. Without naming any banks or countries, the UNODC states that profits from drug trafficking and other illegal activities help the ailing financial system to keep going. Does that seem feasible? I’m afraid so.


According to a report from the US State Department published in 2008, between 2.1 and 3.6 trillion dollars of illegal money is laundered every year. That’s between 3 and 5 percent of the Gross World Product. Democratic Party Senator Carl Levin says documents and witness testimony given during hearings indicate that half of that money can be found in the United States.

Hard figures can be found in a National Money Laundering Strategy report from 2008: the US Drug Enforcement Administration confiscated 396 million dollars in the preceding year. The same report says white-collar criminals (often respected businessmen from upper class backgrounds) are responsible for most of the laundering.

The FBI confirms that money laundering activities are far less prevalent in organised crime and drug trafficking circles. However, that still involves enormous sums of money. In 2007 a Chinese Mexican was arrested in the United States in possession of eighty million dollars.

Although the monitoring of money laundering from drug trafficking and other illegal activities is becoming increasing international and more intensive, the results are extremely poor. The results are also disappointing in the Caribbean and Latin America. The islands of the Caribbean, which are under heavy pressure from the United States and Europe, have adopted tougher policies. In Latin America too various countries have introduced more stringent norms to combat money laundering.

The results are not inspiring. Evaluation of the reports submitted to the inter-governmental organisation combating money laundering in Latin America, Grupo de Accion Financiera de Sudamerica (GAFISUD), shows that numbers of confiscations, arrests and convictions are very low, with the exception of Colombia.

Mafia bosses

The fight against drug trafficking does not mean that no negotiation takes place with the major mafia bosses. Three years ago the US authorities made a deal with a family which heads a drugs cartel. In autumn 2006, twenty-nine members of the family signed the agreement with the Justice Department: they confessed, were sentenced to 30 years in prison and paid more than two billion dollars. In exchange, Washington promised to leave the rest of the family in peace.

It’s remarkable that the United States and the rest of the world still continue to insist on a ban on drugs. This policy has clearly failed, users have been stigmatised, weak states have been further destabilised and national and international mafias have grown stronger. Moreover, it contributes to the maintenance of an illegal economy from which those in power and the unscrupulous continue to profit.

Juan Gabriel Tokatlián is a regular columnist for the Latin-American section of Radio Netherlands Worldwide. He is professor of International Relations at the University of San Andrés in Buenos Aires.

– Article from Radio Netherlands Worldwide