Banking company indicted for scheme to hide drug money. Undercover probe by Customs agents reveals $32 million `laundering' network
An international sting operation led by US Customs has uncovered an alleged drug-money laundering network of stunning proportions. At the center of the charges is the world's seventh largest privately held financial institution, the Luxembourg-based Bank of Credit and Commerce International.
The bank is charged with laundering millions of dollars in profits of the Medell'in Cartel, the Colombian drug mafia credited with supplying 80 percent of the cocaine that enters the United States.
This marks the latest strike in the battle to cut off the riches garnered in the drug trade from entry into the legitimate economy. Customs Commissioner William Von Raab called it ``the most important money-laundering case in US Customs history.''
The case, dubbed Operation C-Chase, also marks the first time an entire international financial institution has been indicted.
Words like ``shadowy'' and ``secretive'' have trailed the financial institution for years.
So have Customs officials, working with British and French agents. On Tuesday, Customs announced the indictment of the bank and 84 people - some of whom are present or former bank officers.
After two years of undercover investigation, Customs alleges that the network laundered at least $32 million, and the bank itself laundered at least $14 million.
In announcing the indictments, Commissioner Von Raab spoke of the operation as a shot across the bow of the international banking industry.
``These people will have to realize that civilized governments will no longer put up with the notion that business is just business,'' Mr. Von Raab said. ``I'm putting the banking industry on notice: Business with crooks is a crime.''
BCCI has some $20 billion in assets and offices in 72 countries, including nine offices in the US. The bank's specialty is in financing international business deals. It was founded and is still owned by Arab interests, which used it as an outlet for petrodollars.
In 1985, Forbes magazine reported that the bank's niche had become smuggling currency between countries to help clients avoid exchange regulations. BCCI denied that allegation. Now, the bank's attorneys will say only that their client trusts it will be vindicated.
The indictments, made by the US attorney in Tampa, Fla., outline a picture of how the bank did business. The laundering involves a complex series of international wire transfers and foreign loans set up to get money from Tampa to Colombian drug lords.
In July 1986 an undercover Customs agent joined a money laundering organization that used BCCI's Panama office to move US money to Colombia. As trust in the agent grew, BCCI officers allegedly met with him to suggest alternative laundering methods using the BCCI branches worldwide.
According to the BCCI indictment, six bank officers have documented knowledge that drug trafficking is the source of money they were laundering. Nine top officers have been indicted for criminal conspiracies.
Money laundering was more pervasive by banks before the Bank Secrecy Act of the early 1980s, most observers believe. The act requires that banks report cash deposits of $10,000 or more to the US Treasury. (This spawned a practice of ``smurfing,'' sending messengers with $9,999 deposits to various banks to avoid reports.) Now, most major laundering is thought to require the criminal collaboration of bank employees.
``Most of the banks went legitimate after that,'' says Customs spokeman Clif Stallings in Miami.
But Von Raab appears has doubts. ``Six years ago I came to Florida concerned about sleazy practices among bankers. Today I am back and I'm sorry to say that nothing seems to have changed.''