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-Caveat Lector- Bulk supplies of cash abroad go mostly to criminals
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=39244
Regulators and politicians paint money laundering as an "us versus them"
battle with drug traffickers, criminal gangs and terrorists, but when the
role played by the U.S. Treasury and the Federal Reserve is examined, the
demarcation between the good guys and bad guys is far less clear.
Members of Congress recently made some tough statements about violations of
money-laundering laws committed by Riggs National Bank and Swiss giant
Union Bank of Switzerland.
Rep. Sue Kelly, R-N.Y., who chairs the House Financial Services
subcommittee on Oversight and Investigations, began a hearing at the end of
May by noting that the panel would examine the "inexcusable lack of
compliance and enforcement" by both banks and the agencies that supposedly
regulate them.
Kelly lambasted Daniel Stipano, deputy chief counsel of the Treasury's
Office of the Comptroller of the Currency, or OCC, noting that the OCC's
credibility was so diminished that Riggs employees continued to violate the
Bank Secrecy Act, even after an OCC examiner was placed on site.
Kelly said, "It is evident that this is still a work in progress" and
concluded that a new centralized regulator to attack money laundering is
needed.
"Brazen violators should be going to jail," she declared.
These latest cases of major violations of money-laundering laws mimic the
earlier scandal involving the sales of dollars in Russia via the Bank of
New York, scandals that are just the latest examples of financial
institutions that got caught in the complex web of laws and regulations
governing the movement of cash offshore. So rampant and widespread is the
movement of dollars offshore that the basic story had been dramatized by
films and TV shows such as "Law & Order."
"Nearly three years ago, the Justice Department called the Bank of New York
[BONY] money-laundering scandal 'just' a Russian tax-evasion scheme,"
reported Lucy Komisar for Pacific News Service in August 2002.
"Now, European investigations show that BONY was a channel for organized
crime. And according to a document obtained by Pacific News Service, some
of the alleged Russian mafia leaders have operated freely in the United
States. The widening scandal reveals Washington's dangerous reluctance to
confront international criminal networks. In August 1999, U.S.
investigators revealed that Russians had laundered at least $7 billion
through accounts at BONY, a major U.S. institution with important Russian
business."
Pacific News Service reported almost two years ago that "the BCCI [Bank of
Credit and Commerce] and the BONY cases show the danger of letting criminal
networks fester."
The news service described how Khalid bin Mafouz, the No. 2 BCCI official,
got off with a minor fine when the Pakistan-based BCCI collapsed in a
megafraud that made $8 billion "disappear." Mafouz, who is Osama bin
Laden's brother-in-law and one of his reputed financiers, never revealed
where the missing billions went.
Regulators and politicians love to paint money laundering as an "us versus
them" battle with the forces of evil -- the drug traffickers, criminal
gangs and terrorists who threaten America's security. And there is no doubt
that physical U.S. currency is a primary means for terrorists and drug
traffickers to store and move the proceeds from their activities.
Consider just one episode from the U.S. occupation of Iraq: "When a United
States Army sergeant broke through a false wall in a small building in
Baghdad on a Friday afternoon a little over a year ago, he discovered more
than three dozen sealed boxes containing about $160 million in neatly
bundled $100 bills," reported the New York Times on June 6.
"Later that day, soldiers found more cash in other hideaways near the
Tigris River, in an exclusive neighborhood that elite members of Saddam
Hussein's government once called home. By the end of the evening, they had
amassed 164 metal boxes, all riveted shut, that held about $650 million in
shrink-wrapped greenbacks. The cash was so heavy, and so valuable, that the
Army needed a C-130 Hercules cargo plane to airlift it to a secure location."
While such examples of large seizures of illicit cash make it seem easy to
identify the bad actors in the world of offshore money, if you examine the
role played by the U.S. Treasury and the Federal Reserve system in the
market for physical dollars, the demarcation between the good and bad guys
is far less clear.
The Fed's "Extended Custodial Inventory," or ECI, service provides physical
cash to banks and financial institutions around the world. In practical
terms, a foreign bank "buys" physical U.S. currency at a discount from the
Fed -- often tens or even hundreds of millions of dollars in a single
transaction -- and the foreign bank then ships the money to some foreign
land, beyond the reach of U.S. law.
The Fed profits handsomely from this trade and pretends that this business
is a valuable service to legitimate businesses, but in fact the U.S.
central bank has no way of knowing where its dollars truly end up.
Thomas C. Baxter Jr., executive vice president and general counsel at the
Federal Reserve Bank of New York, testified that the Fed's ECI program
"serves as a means to facilitate the international distribution of U.S.
banknotes, permit the repatriation of old design banknotes, promote the
recirculation of fit new-design currency, and strengthen U.S.
information-gathering capabilities on the international use of U.S.
currency and sources of U.S. banknote counterfeiting abroad."
Remarkably, Baxter revealed to Kelly and the other members of the House
panel that "as much as two-thirds of the value of all Federal Reserve notes
in circulation, or over $400 billion of the $680 billion now in
circulation, is held abroad."
He added that "the billions of dollars held overseas represent a financial
benefit to U.S. taxpayers" because the Fed receives foreign currency in
exchange for these dollars and transfers most of this "profit" to the
Treasury. Baxter added that wholesale banknote dealers purchase
approximately 90 percent of the U.S. banknotes that are exported to
international markets from the Federal Reserve Bank of New York.
During the hearings chaired by Kelly, several members of Congress asked Fed
officials whether it might not be prudent to limit the sale of dollars to
U.S. institutions, in part because such shipments can be used by terrorist
organizations to hide assets and finance acts of terror.
But the central bank responded that it is necessary to use foreign banks to
serve countries where there is "a high demand for physical U.S. currency."
The problem, though, is that the U.S. central bank cannot say with any real
certainty from whence comes this demand for dollars.
Baxter told the Kelly panel that "The ECI program serves an important
function by ensuring that we supply USD banknotes to the global market in
an efficient manner, and that the quality of, and confidence in, our
currency is maintained at a high level."
Yet no one at the Federal Reserve Board or the Treasury has explained why
any action of government -- apart from resisting the temptation to print
overmuch fiat currency -- has anything to do with private demand for dollars.
In fact, say a number of sources, Federal Reserve officials are unwilling
to admit the truth regarding shipments of dollars offshore, namely that
most of the demand for physical dollars outside the United States is for
illicit purposes. One 25-year veteran of the private banking world
describes for Insight how bundles of U.S. $100 bills -- in some cases
decades-old, uncirculated bills -- are used to transfer hundreds of
millions of dollars at a time without any trace.
The cash hoard found in Iraq by U.S. forces is just one such cache of
dollars that can be used to pay for assassinations, bribe government
officials or help a drug trafficker pay his supplier.
A former consultant to the Senate Banking Committee opined after the Kelly
hearings: "It is a monumental act of stupidity for Congress and the
Treasury to allow the Fed to ship large amounts of physical currency around
the world and then act shocked when the customers turn out to be drug
dealers and money launderers. The U.S. government should promote the
electronic use of dollars as a means of exchange, but not the use of
physical currency."
Several bankers, lawyers and other observers of the world of offshore money
tell Insight that it is high time that members of Congress such as Sue
Kelly support legislation to end the government-sanctioned shipment of U.S.
currency offshore. One lawyer suggests that instead of shipping planeloads
of new $100 bills to distant lands, Congress instead should prohibit most
bulk shipments of dollars outside the United States and force holders of
older U.S. currency to repatriate these notes to the domestic offices of
U.S. financial institutions by a date certain or lose the value forever.
While the U.S. government may have an interest in promoting the use of the
dollar via legitimate financial institutions, there is little justification
for the wholesale shipment of billions of dollars worth of physical
currency around the world save to enable terrorism and illegality. Indeed,
if Washington, including Congress, is really serious about fighting
terrorism, one of the most practical steps that can be taken is to prohibit
the Fed and Treasury from encouraging the use of physical dollars outside
the United States and its territories.
Please let us stay on topic and be civil.-Home Page- www.cia-drugs.org
OM
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Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at:
http://www.mail-archive.com/[EMAIL PROTECTED]/ <A HREF="">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
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