Friday, January 16, 2009

And we wonder why 'Sanctions' don't work...

It's because foreign banks will find a way to circumvent them.

"Lloyds TSB has agreed to forfeit $350 million (£231 million) to U.S. authorities in connection with charges it faked records so clients from Iran, Sudan and elsewhere could do business with the U.S. banking system."


What does that mean in this case? (I know because 'Tracking The Terrorist Funds' used to be my job) - Let's look at that for a minute...

See, a wire transfer actually happens in two parts:

- The transfer itself, where the electronic 'money' moves through various correspondent accounts to make the connections between "Bank A" and "Bank G" (without a direct account-connection, the transfer will have to change hands several times between 'A' and 'G') .

- the second part, that travels 'with' the transfer, is the "Instruction" - this has information about the Originating bank, the Originating account-holder, Destination bank and which receiving account-holder is actually having the funds paid out to him.

That Second part is what investigators et al use to 'flag' transfers going in/out of different regions, to/from different individuals/corporations/front-businesses, etc.

So, what exactly did Lloyds do for their "Known and Valued Customers"?

"The U.S. Justice Department said that, from 1995 to 2007, Lloyds' offices in Britain and Dubai removed information such as customer names, bank names and addresses so wire transfers would not be flagged and blocked as improper by U.S. financial institutions."

Read that again: "from 1995 to 2007"

That means that after WTC-1 in 1993,
during the USS Cole bombing in 2000,
during WTC-2 on 9/11,
during the US invasion of Afghanistan and right through the Iraq war, ...

Lloyds Bank deliberately rigged transfer records to ensure that money could flow freely to & from sanctioned countries and individuals.

...and lest you wonder "how bad could it have really been?"

"This process of 'repairing' or 'stripping' ... allowed more than $350 million in transactions to be processed by U.S. correspondent banks that might have otherwise been blocked or rejected," the department said in a statement.

Oh, and make no mistake - there's very little "might" involved there.

Not only law-enforcement and regulators, but banks themselves spend truly ludicrous amounts of money developing and implementing systems and investing in analysis for the sole purpose of filtering, vetting, flagging and responding to that very information - in fact, an entire industry has sprung up around this very work.

But - as Lloyds Bank clearly knows - none of that is worth the electrons it pushes around if the banks deliberately strip out the very data-points that identify the problem.

We're not talking about the owner of "Achmed's Falafel Stand" sending money to his kid in college, btw:

"The stripping allowed about $300 million to be sent between the United States and Libya, about $21 million between the United States and Sudan and about $20 million between Libya and the United States without scrutiny to ensure it was legal."

...and by 'legal' they mean "not stopped dead for being obviously illegal".

All of that said, here's the part really gets my blood-pressure up:

First -

"Lloyds' criminal conduct was designed to assist its clients in avoiding detection by filters employed by U.S. banks because of United States economic sanctions against Iran, Sudan and Libya,"
- followed by -

"The actions violated the International Emergency Economic Powers Act, which allows the U.S. president to block commerce with countries deemed a threat to the United States."
- and then we find -

"The U.S. Justice Department and Manhattan District Attorney said on Friday the London-based Lloyds had agreed to the forfeiture to settle charges stemming from the investigation."
W.T.F. ?

Lloyds Bank knowingly and deliberately commits overt acts specifically designed to circumvent International Sanctions - allowing free and unimpeded flow of monies into and out of specifically-designated terrorist and genocidal nations and...

.... they pay a fine?!?

How exactly do you NOT prosecute for something like this?

And at what point do we take "Give us money and we won't prosecute you for your crimes" and just call it extortion?

Clearly - somehow - at this point, no-one is taking the 'Crime' part of this seriously - even Lloyds is approaching this as merely the 'Cost of Doing Business':

"Lloyds said it had set aside 180 million pounds last year to cover a possible settlement in the U.S. case and it "does not anticipate any further enforcement actions."
'Yeah, we did it, so we set a little something aside to cover the cost of clean-up... no big.'

It's like it's some kind of frakkin' GAME to them - like Lloyds landed on their 'Park Place', and now have to pay-up.

What do you want to bet that Manhattan D.A. is the Governor of NY in the next couple of years?

I'll bet he's reserving his special room @ 'VIP-Escorts' as we speak.

Of course, when the place is raided, it'll be difficult to tell which one's the whore.

- MuscleDaddy

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