New report on cocaine trade finds banks in consuming countries get drug profits, while producers get violence
Yes, BC is currently in the grip of a wave of shootings related to organized crime and the drug trade, but the random shootings here are nothing compared to the rampant violence shaking countries like Colombia and Mexico.
That’s because the real cost of the drug trade is born by producing countries while the profits are reaped by the consuming ones, according to a provocative new study from Colombia. The authors claim “financial regulators in the west are reluctant to go after western banks in pursuit of the massive amount of drug money being laundered through their systems.”
Only 2.6 percent of the street value of cocaine produced in Colombia actually remains in that country. The rest of the revenue — hundreds of billions of dollars — is taken by organized crime and then laundered through First World banking systems.
U.S. drug prohibition policies attempt to stamp out the drug trade by shutting down production, not by interfering with the financial system that is laundering the cash, they argue.
“I put it to Americans like this,” says report author Daniel Mejia. “Suppose all cocaine consumption in the US disappeared and went to Canada. Would Americans be happy to see the homicide rates in Seattle skyrocket in order to prevent the cocaine and the money going to Canada? That way they start to understand for a moment the cost to Colombia and Mexico.”
The mechanisms of laundering drug money were highlighted in the Observer last year after a rare settlement in Miami between US federal authorities and the Wachovia bank, which admitted to transferring $110 million of drug money into the US, but failing to properly monitor a staggering $376 billion brought into the bank through small exchange houses in Mexico over four years.