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The real green deal is money laundering — and it’s an emergency


That’s because our real national emergency, and the real “Green New Deal” that Congress must act upon, is based on another type of “green” — money laundering.

{mosads}Let me explain: 

Rep. Ocasio-Cortez has “expressed concerns that Amazon’s decision to set up shop in Queens would hasten gentrification, increase housing prices and displace current residents,” according to CNBC. 

But it’s not Amazon that has increased housing prices in New York. Nor, for that matter, has it been the crisis at our border that purportedly justifies the declaration of a national emergency. 

Rather, Treasury Department data shows that 30 percent of high-end real estate deals subject to a new watchdog program involved “suspicious activity” and, potentially, money laundering. This is not restricted to New York. Treasury also believes real estate in Miami and Los Angeles, among other major markets, is being misused. 

Imagine looking over the skyline of New York at night and seeing one-third of the windows dark, most in luxury skyscrapers. The “Panama Papers” and “Paradise Papers” cases demonstrated that a significant number of these dark-windowed apartments are the result of the layering transactions of a vast, global network of money launderers and kleptocrats.

El Chapo was convicted of laundering at least $14 billion and violating the Bank Secrecy Act. As I know personally, that drug money literally amounted to tons of cash. What received very little press coverage, however, was the involvement of the U.S. and global banking system in helping El Chapo. 

The Bank Secrecy Act is supposed to impose regulatory and criminal-penalty duties on banks to design policies, procedures, systems and controls to monitor and prevent the use of banks for money laundering. 

If money laundering or suspicious activity is detected, the banks are obligated to file one of two types of secret reports with the Financial Crimes Enforcement Network — either a currency transaction report  (CTR) for transactions of cash of $10,000 or more or a suspicious activity report (SAR). 

That CTR or SAR is then shared with federal law enforcement, as well as the bank’s primary federal regulator, which for large U.S. or foreign banks is often the Office of the Comptroller of the Currency (OCC). 

Frequently, some large banks fail to have appropriate controls, as El Chapo’s conviction demonstrated at least $14 billion-worth of times.

After drug money is placed into the banking system, it is used for ostensibly legitimate purposes — like buying real estate in New York — as a way to park vast quantities of cash. El Chapo did not sneak billions across the border in vehicles, and no wall can prevent money laundering at this level of sophistication. 

This is because his billions were not moved by coyotes and illegal border-crossers. Rather, by hiring professionals like attorneys and accountants, El Chapo, as well as many other cartel leaders and kelptocrats, are creating shell companies in secrecy havens

Then, using these shell companies as cover, they deposit their money into foreign bank branches, claiming fake profits. These foreign banks are not obligated to file the CTRs or SARs, as required in the U.S. But many of these foreign banks have U.S. operations.

{mossecondads}Then, the banks use commercial armored cars to move the money across the border into their U.S. branches. Some banks regard these bulk cash transactions as being “low risk” and do not file CTRs or SARs, or ask very many questions. What’s worse, CTRs are not even required for wire transactions, and those are used frequently. 

Once the dirty money is in the U.S. banking system, it can be used in check and wire form to purchase real estate or even pay college tuition, among other large-ticket items.

We know how corrupt government officials and cartel leaders move their cash in large part because the files of attorneys in two different law firms were stolen in the “Panama Papers” and “Paradise Papers” cases.  

The trial and evidence presented in Brooklyn federal court against El Chapo makes clear that more must be done to combat money laundering.

Rather than focus on building walls to keep out low-level operators and scaring off global corporations because of their supposed effect on increased housing prices in New York City, both the Republican leadership and the new-look Democrats should instead keep their eye on the real green deal — money laundering.   

David P. Weber is a professor at the University of Maryland, where he teaches professional ethics, forensic accounting and fraud examination. He is the former special counsel for enforcement at the OCC, and the former section chief of Enforcement Unit I at the Federal Deposit Insurance Corporation. 

Tags Alexandria Ocasio-Cortez Bank Secrecy Act economy El Chapo Finance Financial Crimes Enforcement Network Financial regulation Financial services HSBC Kleptocracy Mexican drug cartels Money laundering Suspicious activity report Tax evasion Terrorism

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