La Lista Loca – Part 1

By William K. Black
IAEN, UMKC, U. Minnesota

This is the first column in a five-part series about money laundering. When you think about Ecuador and international financial regulation the fact that leaps out at you as bizarre is Ecuador’s presence on the short list of nations that purportedly have “strategic [money laundering/funding of terrorism] deficiencies that have not made sufficient progress in addressing the deficiencies….”  Algeria, Ecuador, and Myanamar (Burma) are the only three nations on the Financial Action Task Force (FATF) (GAFI, in Spanish) “gray” list.  There are two nations on the FATF “black list” for providing funding to terrorists – North Korea and Iran.

Ecuador has counter-terrorist financing (CFT) laws and no one sentient thinks that Ecuador is funding terrorism, so the issue in Ecuador’s case is money laundering.  Ecuador has anti-money laundering (AML) laws, so the issue is whether Ecuador is one of the three greatest centers of money laundering in the world despite its adoption of AML laws.  Syria, Jordan, Libya, Saudi Arabia, the Emirates, Egypt, Afghanistan, Iraq, Pakistan and Lebanon’s banks and informal financial operations are wide-open to money laundering, have often funded terror, and have nothing that even approaches a rule of law.  Only Algeria, in that massive region of the world, makes the FATF list even though no one thinks Algeria’s banks even comes close to the other nations I have listed in its region in the extent to which they launder money and provide financial support to terrorists.  Each of the nations I have listed should be on FATF’s “black list” if FATF followed any principles in creating its lists.

But the nations I have listed are not the largest centers of money laundering or terrorist funding – they are simply the most obvious nations.  The biggest centers of money laundering and terrorist funding in the world are UK banks and UK-related tax havens in the Caribbean and Channel Islands.  The State of New York’s investigation of Standard Chartered, a UK bank, found that it “process[ed] $250bn of transactions on behalf of Iranian clients” in violation of U.S. laws.  Standard Chartered aided the people making these illegal transaction by hiding the true nature of the deal from U.S. regulators.  Instead of aiding NY’s efforts to stop massive AML and CFT violations involving Iran – a nation of the FATF “black list” – the federal prosecutors and regulators attacked the NY regulators.  The U.S. treats massive UK AML and CFT violations as minor.

2 Responses to La Lista Loca – Part 1

  1. I hope, Prof. Black, you also mention in this series the Wolfsberg Group, so-called as they met in the Wolfsberg Chateau in Switzerland. They would consist of the top international banks who met to discuss AML, or anti-money laundering processes — rather funny, given the number of these banksters who have been found guilty of money laundering over the past decade.

    Perhaps they were meeting to discuss ways to keep the competition out of it?

  2. Or maybe it’s because Ecuador is a socialist success story run by a trained economist that’s successfully resisting having it’s resources stripped by our international oil pirates? Nah…