Abstract
This chapter discusses the first two Levin-led investigations at PSI, both focused on money laundering. The first examines laundering money through U.S. banks catering to wealthy individuals. Using a Citibank Private Bank case study, the investigation profiles four world leaders or family members with millions in deposits: Raul Salinas, brother to the then President of Mexico; Omar Bongo, then President of Gabon; the sons of General Sani Abacha, the then recently deceased President of Nigeria; and Asif Ali Zardari, husband to former Pakistan Prime Minister Benazir Bhutto. The second, correspondent banking inquiry presents ten case studies of foreign banks using U.S. accounts to move suspect funds. The chapter culminates with enactment of Levin-led anti-money laundering legislation in the aftermath of the 9/11 terrorist attack.
“There is no power on earth that can tear away the veil behind which powerful and audacious and unscrupulous groups operate save the sovereign legislative power armed with the right of subpoena and search.”
Senator Hugo Black (D-Alabama), “Inside a Senate Investigation,” 1936 Harper’s Magazine ©
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Notes
- 1.
The information in this section is based upon “Private Banking and Money Laundering: A Case Study of Opportunities and Vulnerabilities,” S. Hrg. 106-428 (11/9–10/1999) (hereinafter “Private Banking Hearing”), including the minority staff report, at 872–939 (hereafter “Private Banking Report”), https://www.gpo.gov/fdsys/pkg/CHRG-106shrg61699/pdf/CHRG-106shrg61699.pdf.
- 2.
See, for example, “Swiss Government Confiscates US$114 Million in Raul Salinas de Gortari’s Bank Accounts,” The Free Library, 1998, Latin American Data Base/Latin American Institute (7/4/2016), http://bit.ly/2hHWehG; “Swiss Recount Key Drug Role of Salinas Kin,” New York Times, Tim Golden (9/19/1998), http://nyti.ms/2mClE1X.
- 3.
United States v. Giraldi, 86 F.3d 1368 (5th Cir. 1996), http://bit.ly/2hHWihq.
- 4.
“Sound Risk Management Practices Governing Private Banking Activities,” Federal Reserve Bank of New York (1997) (providing private banks “with guidance regarding the basic controls necessary to minimize reputational and legal risk and to deter illicit activities, such as money laundering”), https://www.newyorkfed.org/banking/circulars/10962.html.
- 5.
See, for example, “55-Month Jail Term in Citibank Fraud,” New York Times (7/28/1998), http://nyti.ms/2mClZSh.
- 6.
The information on the Salinas account is based upon the Private Banking Hearing, including the Private Banking Report, at 889–901.
- 7.
Litigation over the frozen funds continued for the next decade. In 2008, Switzerland returned about $74 million to Mexico and additional funds to other parties. See, for example, “Salinas Funds Finally Head Back to Mexico,” Swiss Info (6/18/2008), http://bit.ly/2hLWwEe. In 2013, a Mexican court held that, while it could not explain how Raul Salinas had accumulated his wealth, prosecutors had failed to establish that he had obtained certain properties and monies by abusing his position, and acquitted him of charges of “illegal enrichment.” The ruling was upheld on appeal. See, for example, “Mexican Ex-President Salinas’s Brother Acquitted,” Wall Street Journal, Jose de Cordoba (12/16/2014), http://on.wsj.com/2mDttVe.
- 8.
The information on the Bongo account is based upon the Private Banking Hearing, including the Private Banking Report, at 910–924.
- 9.
The information on the Zardari account is based upon the Private Banking Hearing, including the Private Banking Report, at 902–909.
- 10.
The information on the Abacha account is based upon the Private Banking Hearing, including the Private Banking Report, at 925–934.
- 11.
S. 1920 (106th Congress).
- 12.
The information on correspondent banking is based upon the five-volume PSI hearing record, “Role of U.S. Correspondent Banking in International Money Laundering,” S. Hrg. 107-84 (March 1, 2, 6, 2001) (hereinafter “PSI Correspondent Banking Hearing”), and accompanying report, “Correspondent Banking: A Gateway for Money Laundering,” Volume I, at 273–691 (hereinafter “Correspondent Banking Report”), https://www.gpo.gov/fdsys/pkg/CHRG-107shrg71166/pdf/CHRG-107shrg71166.pdf (Volume 1); https://www.gpo.gov/fdsys/pkg/CHRG-107shrg73779/pdf/CHRG-107shrg73779.pdf (Volume 2); https://www.gpo.gov/fdsys/pkg/CHRG-107shrg73780/pdf/CHRG-107shrg73780.pdf (Volume 3); https://www.gpo.gov/fdsys/pkg/CHRG-107shrg73781/pdf/CHRG-107shrg73781.pdf (Volume 4); https://www.gpo.gov/fdsys/pkg/CHRG-107shrg74037/pdf/CHRG-107shrg74037.pdf (Volume 5).
- 13.
S. 1371 addressed both private banking and correspondent banking deficiencies.
- 14.
“The Administration’s National Money Laundering Strategy for 2001,” Senate Committee on Banking, Housing and Urban Affairs, S. Hrg. 107-641 (9/26/2001), at 66 (prepared statement by Senator Levin), see also 4–6 (testimony of Senator Levin), https://www.gpo.gov/fdsys/pkg/CHRG-107shrg81577/pdf/CHRG-107shrg81577.pdf.
- 15.
“Banks Seek to Alter Bill,” Washington Post, Kathleen Day (10/11/2001), http://wapo.st/2ATyElU.
- 16.
“Money Laundering Limits Moves Through Senate Panel,” Congressional Quarterly, Suzanne Dougherty (10/4/2001).
- 17.
Information about S. 1510, and companion House bill H.R. 3162, can be found in the floor statement of Senator Patrick Leahy and others in connection with final approval of the Patriot Act. See, for example, Congressional Record (10/25/2001), at S10990-S11060.
- 18.
The Senate anthrax cleanup took three months, included seven buildings, and cost $27 million. See “Capitol Hill Anthrax Incident” GAO, Report No. GAO-03-686 (6/2003), at 2–3, 8, http://www.gao.gov/new.items/d03686.pdf.
- 19.
See United States v. Miller, 425 U.S. 435 (1976).
- 20.
The new Title III contained a long list of provisions to strengthen U.S. AML laws.
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Bean, E.J. (2018). Combating Money Laundering: Round One. In: Financial Exposure. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94388-6_3
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