Money Fight against money laundering: "Everyone does it badly, but some do it less badly than others"

18:19  21 september  2020
18:19  21 september  2020 Source:   wiwo.de

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The USA has a special role in the fight against money laundering: Since the dollar is the world's leading currency, a large part flows of the world's black money at some point through the American financial system.

Bruce Bagley was a luminary. For years, the professor at the University of Miami had researched organized crime and drug cartels - and the ways in which they channel their illegally earned money from the shadows into the legal money cycle. He was considered one of the world's leading experts in the field - but at some point he decided not only to supplement his salary by writing books, but also by putting his knowledge to a practical test. However, one cannot speak of a successful experiment.

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On June 1, Bagley pleaded guilty to money laundering. According to the federal prosecutor of the Southern District of New York, which led the investigation, he transferred more than two million dollars in bribes from Venezuela to the United States via foreign accounts of a Colombian in Switzerland and the United Arab Emirates and distributed it by check. Bagley kept ten percent of the money to himself.

The fact that Bagley was caught also casts doubt on the academic's expertise. The American anti-money laundering system is considered to be extremely error-prone, despite expensive requirements and draconian penalties. Not that there is more effective action against clearing money elsewhere in the world. "Everyone does it badly, but some do it less badly than others," said David Lewis, head of the Financial Action Task Force (FATF), which oversees compliance with anti-money laundering rules worldwide, in a recent interview.

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That there is indeed a lot of catching up to do, despite all efforts, shows the evaluation of internal documents of the US Treasury Department, in which NDR, WDR, "Süddeutsche Zeitung" and Buzzfeed News were involved in Germany. The documents suggest that credit institutions did business with high-risk customers despite strict guidelines. They are said to have reported these processes sometimes only with a long delay, sometimes years. In Germany, the revelations mainly affect Deutsche Bank.

Investigators and legislators around the world have declared war on the problem of money laundering. Every year, through illegal activities such as drug trafficking, fraud or simple theft, astronomical amounts are generated and transferred via detours to the legal part of the financial system. The United Nations estimates that black money worth two to five percent of the world's gross national product is laundered every year. That would be up to two trillion dollars. The G7 nation Italy generates that much in one year.

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In order to deal with this gigantic financial flow, the US government has been exerting pressure primarily on the banks for years. Since the anti-terror laws following the attacks of September 11, 2001, the money laundering laws were tightened, banks have had to set up anti-money laundering departments and report suspicious customers and transactions.

It is a system that has meanwhile established itself worldwide. After all, the United States has a unique, special role in the fight against money laundering. Since the dollar is the world's reserve currency, a large part of the black money generated worldwide will eventually flow through the American financial system, explains Edwin Truman of the Peterson Institute for International Economics (PIIE). “This is why the US requirements are now being applied almost everywhere in the world,” he explains. In fact, in 1989, the United States, along with the other G7 nations, created the framework for anti-money laundering legislation. They also founded the FATF and thus established the rules that are valid almost all over the planet - even though they are not binding under international law. In fact, only two countries explicitly do not adhere to the system: Iran and North Korea. Despite its almost universal distribution,

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experts consider it extremely holey - and above all expensive. In 2018 alone, financial institutions in the US spent almost $ 26 billion on anti-money laundering measures, according to a study by the LexisNexis Risk Solutions institute. That same year, only around 1,100 people were convicted of the offense in the United States. "I don't want to come across as nihilistic, but I don't think it's worth the effort," said Peter Reuter, professor of criminology at the University of Maryland. The system is simply not taken seriously - despite the horrendous costs and sometimes extremely tough penalties.

Nevertheless, the institutes cannot afford to ignore it. Deutsche Bank recently felt this again. In May, the Fed informed the institute that its money laundering controls were still inadequate. In the past, the bank had had trouble with his handling of black money. She was fined $ 10 billion for this three years ago.

The Frankfurters are not alone. Shortly after they got hit by the Swiss UBS, which even had to shell out $ 15 billion for violating the anti-money laundering system. This is why the assumption has been widespread among foreign banks for a long time that the supervisors looked more closely at them than at their American competitors. An accusation that Kieran Beer, chief analyst of the Association of Certified Anti-Money-Laundering Specialists (ACAMS), has little to gain from. "In some international banks there is a simple notion that you don't have to pay close attention to US rules," he says. In addition, the supervisors also tackled American institutes. J.P. Morgan Chase, for example, the largest bank in the United States, was also fined billions in the fall. The New Yorkers had violated sanctions against Iran, Cuba and Syria, among others, 87 times.

Despite these high fines, the American anti-money laundering system is also prone to errors. States such as Delaware or Nevada still offer the possibility of parking money in partnerships, whose beneficiaries remain largely anonymous - a huge loophole that the country is slow to get over. On the Basel ALM Index, which sorts countries according to money laundering and terrorist financing risk, the USA only lands in the middle.

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