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Lots of money

The UNODC discusses some rather significant money laundering…

More than one trillion dollars: this is the staggering amount of money probably laundered annually in recent years, says Pierre Lapaque, chief of the section dealing with organized crime and money-laundering at UNODC. In 1998, the International Monetary Fund estimated this figure to be the equivalent of between two and five per cent of global GDP, and UNODC considers that such a range remains plausible today, says Lapaque.

That’s a lot. Where’s it from?

“We cannot separate drug money from crime money – it’s all dirty money,” explains Lapaque. “It’s a huge flow but we cannot make precise estimates. Let me put it this way: you have to identify the stream of illicit money before it joins the rivers of global financial flows. That’s the crux of the problem in making estimates.”

Hmmm…. I bet you I could come up with a way to separate drug money from crime money…

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12 comments to Lots of money

  • Jake

    There is also this statement:

    In the long term, criminal groups are not important, what really matters is to tackle the criminal markets to make them less attractive. Focusing solely on law enforcement is short-sighted. Imprisoned criminals will be immediately replaced by others, and their activities will continue as long as crime is lucrative.

    But hey, at least prohibition doesn’t make drugs lucrative…

  • I wonder how more disingenuous and manipulative can war-on-drugs-mongers be? It really, beggars belief. The UNODC piece Peter is talking about can be read here:

    http://www.unodc.org/unodc/en/frontpage/2011/August/tracing-dirty-money-an-expert-on-the-trail.html?ref=fs1

    Who can forget the Wachovia Bank case? http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

    It’s interesting, isn’t it, that when people talk about corruption, bribery, etc. they talk as if they only applied to drug producing countries, the likes of Mexico or Colombia to mention only two. What they fail to realise is that for the illegal drug market to function a close and effective network of operators needs to be in place in those countries where the demand is not only high, but whose ‘customers’ are able and willing to pay a high price for their merchandise.

    Take the organised crime and the financial system, for instance. Both go hand in hand and their relationship has been crucial to the survival and successful growth of organised crime. The banking system does not only allow drug cartels launder the enormous amount of cash generated by their trade, but more importantly, also allow them to recycle, capitalise, invest and increase the profits on their astronomical wealth LEGALLY.

    And this is just the tip of the iceberg, for it is not just banks or some isolated “bad apples” that are instrumental in the efficient and smooth operation of the drug market on behalf of organised crime worldwide. The corruption runs wide as well as deep, and touches every echelon of our society: government officials, politicians, judges, you name it! We have to ask ourselves: can the thousands and thousands of tons of drugs that manage to enter the US, the UK, and any other major drug consuming country in the world, year after year be explained by the ingenuity and industriousness of drug traffickers alone?

    The reality is that a business that generates US320 billion per year (and remember this has been going on for several decades) cannot be sustained on drug traffickers’ ability to fool enforcement agencies in every country and every port alone. Their high success can only be achieved by developing a sophisticated network of highly skilled and motivated ‘entrepreneurs’ in drug consuming countries. More significant, perhaps, is the fact that only a tiny fraction (some estimates talk of as little as 5%) of the revenues generated by the illegal drug market manages to make its way back into the economies of drug producing countries.

    As history has shown us again and again, every war has casualties but also beneficiaries. And judging by what has happened with the war on drugs over the last 50 years, I would say that, all in all, it has been a good war for us. Thank you very much, Prohibition!

    Gart Valenc
    http://www.stopthewarondrugs.o

    • Duncan20903

      .
      .
      I have a significant problem with the Wachovia case because of the United States governments definition of “money laundering.” The definition is so broad that if a black market drug vendor makes a sale, and on his way home stops at McDonald’s for a Big Mac he’s guilty of money laundering. If the cashier or anyone at McDonalds “knew or should have known” that the money for the Big Mac was “drug” money then McDonald’s is also guilty of money laundering. With such an all inclusive definition of money laundering why the heck should I presume that Wachovia was knowingly involved? Especially seeing how the bank was on the verge of going teats up. Imminent bankruptcy tends to make a business do the minimum to prove that they’re not aiding a money laundering scheme.

      Here’s a case where a guy that owned a high end clothing store was convicted of “money laundering” because a high level drug dealer bought lots of clothes and paid cash:

      /snip/
      Edmond was alleged to have moved large amounts of cocaine. In an indictment involving two of Edmond’s associates, it said that they bought between 1,000 and 2,000 kilos per week, in 1992, from the Trujillo-Blanco brothers, who were associated with the Medellin cartel, and sold the drugs to Washington area wholesalers. He was known to have spent some $457,619 in an exclusive Georgetown store (Linea Pitti, specializing in Italian men’s clothing) owned by Charles Wynn who was later convicted on 34 counts of money laundering. Edmond estimated earnings were approximately $300 million annually.
      /snip/

      http://en.wikipedia.org/wiki/Rayful_Edmond

      Sounds like a lot of money for clothes but only if you don’t know how much an exclusive boutique will charge. I’d sure like to know what Mr. Wynn’s average monthly sales were, exclusive of Mr. Edmonds custom.

      Oh just Google it Duncan,
      http://ftp.resource.org/courts.gov/c/F3/61/61.F3d.921.92-3024.html
      Mr Edmonds accounted for about 1/4 of gross sales.

  • malcolm kyle

    He was considered a crime busting untouchable, a man at the heart of the nation’s war on drugs. He had access to the very best police intelligence on organised crime both here and overseas. But some time in the past decade Mark Standen turned bad.

    http://www.abc.net.au/4corners/stories/2011/08/15/3291474.htm

    Former top cop Mark Standen has been found guilty for his part in a multi-million-dollar drug plot. The court heard the former NSW narcotics chief had been attracted by the world he was supposed to be policing.

    http://www.youtube.com/watch?v=Psi9R4FhF-E

    • darkcycle

      Malcolm, if there ever was a distinction between the cops and the criminals in this dirty little war, I’m not clear on what that might have been.
      I know you share a similar perspective.

      • malcolm kyle

        DC, I guess the cops run the lowest risk of detection. And that must count ten-fold for the likes of secret service agents.

        The United States Secret Service is looking for highly qualified men and women from diverse backgrounds who desire risk-free easy money, and an exciting career with loads of groovy chicks.

        The Secret Service is a federal law enforcement agency headquartered in Washington, D.C., with more than 150 offices throughout the United States and abroad. The Secret Service is sanctioned by Congress to behave as they damn well please: protecting international drug shipments and criminal carrying ons. The protective mission of the Secret Service encompasses protection of, among others, people like the late Ahmed Wali Karza and Joaquin “El Chapo” Guzman. … ..

        http://en.wikipedia.org/wiki/CIA_drug_trafficking

        The second biggest business during prohibition in Detroit was liquor at $215 million a year and employing about 50,000 people. Authorities were not only helpless to stop it, many were part of the problem. During one raid the state police arrested Detroit Mayor John Smith, Michigan Congressman Robert Clancy and Sheriff Edward Stein.

        http://tinyurl.com/3l3b92s

  • Peter

    Off topic post (sorry)

    Have had a dialogue with DARE officer Timothy Shoemaker on the Pact 360 site. He’s the guy Ben linked to a few posts back who thinks it’s a “wonderful thing” to bust teenage pot smokers and put them through the legal process, for their own good, of course.

    http://pact360.org/blog/2011/07/27/3-guidelines-from-a-cop%E2%80%99s-personal-handbook/comment-page-1/#comment-47

    I can’t make out whether he is a total cynic, or whether he genuinely believes that the risks of smoking cannabis are so great that a bust record is the lesser of two evils in this case. Either way, his minimalization of the effects on the individual of prohibition law is astounding.

  • Thomas

    What do they mean it can’t be separated. People have been doing that for years.

    http://www.havocscope.com/

    Look at the above link. Drug trafficking is the largest market when you combine cocaine, marijuana, heroin, etc..

    You take away drugs, a significant portion of the black market would be taken away. And a lot of the other illegal activiites, such as human trafficking, arms trafficking, etc.., use money from drug trafficking to fund their operations.

    • Duncan20903

      .
      .
      Especially amusing are the people that claim if you deny them cannabis revenue that they’ll just start doing other crimes and make just as much money. There’s never an explanation of why these criminals are passing on these easily available and lucrative opportunities today. Perhaps they think criminals just aren’t greedy, their motto is “take what they need and leave the rest?” Perhaps dealing cannabis gives them amotivational syndrome?

      • darkcycle

        The idea that crime is fungible. That’s my Father’s take. He seems to think that a person involved in the drug trade (even pot dealers) would just go find some other crime to commit.
        These people cannot get their heads around the idea that if a behavior is not criminalized, the people who engage in that behavior are not criminals. To them, a criminal is a criminal is a criminal. No distinction is needed, or even possible. Some day I’ll run down how he rationalizes a son who flagrantly violated the law as a young man, then returned to his bad ole’ ways when he got sick. The layers of denial and rationalization are deep….