Banks kept afloat in recession by drug funds
An estimated $325 billion of criminal funds have flowed into the mainstream economy and kept several shaky banks afloat according to Antonio Maria Costa, head of the UN Office on Drugs and Crime. He says he has seen evidence that the proceeds of organized crime were “the only liquid investment capital” available to some banks on the brink of collapse last year.
Costa declines to identify the actual banks involved, but implies that they are well-known mainstream brands It seems that at times of crisis there is still money available from crime cartels flush with cash. Some critics have termed the banks criminals and bandits, which while harsh may have some shred of truth behind it if the allegations prove correct.
Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.
“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.
“That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was,” he said.
Drug money saved banks in global crisis, claims UN advisor | World news | The Observer
