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A major hindrance for governments grappling with international drug trafficking is the very banking system that is the lifeblood of the world economy. Banks around the world either knowingly or unknowingly profit from drug trafficking. This has become a particularly acute issue in the international effort to stop the powerful Mexican drug cartels from moving their product. According to Tracy Wilkinson and Ken Ellingwood of the Los Angeles Times, “Banking powerhouse Wachovia Corp. last year agreed to pay $160 million in forfeitures and fines after U.S. federal prosecutors accused it of ‘willfully’ overlooking the suspicious character of more than $420 billion in transactions between the bank and Mexican currency-exchange houses — much of it probably drug money.” The complicity in the international drug trade is rationally explained – it is lucrative and the punishments or detriments to banking institutions are few. Another bank under investigation is HSBC Bank cited by the U.S. Office of the Comptroller of the Currency because of, “critical deficiencies in its 2006-2009 reporting of suspicious activities and its monitoring of bulk-cash transfers.” In Mexico the problem is magnified by the central government’s relatively lean control over its states and the multitude of options presented to money launderers for hiding their cash without ever using a bank at all.

 

[Los Angeles Times]