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U.S. banks found to hold unclean money
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Washington--A huge amount of dirty money has flowed through the U.S. financial system through major U.S. banks that provided accounts to high-risk offshore banks, a new U.S. Senate staff report says.
Among the major banks named in the report are JP Morgan Chase & Co., Citicorp Inc. and Bank of America Corp. In many cases, the banks themselves were unaware of the nature or background of their own clients because "most U.S. banks do not have adequate antimony-laundering safeguards in place to screen and monitor such banks, and this problem is longstanding, widespread and ongoing" the report said.
The report was issued by the Democratic staff of the Senate Permanent Subcommittee on Investigations, which has been studying so-called correspondent banking relationships for the past year. Such relationships allow foreign banks to establish accounts at U.S. banks, giving them access to the U.S. banking network. How much of the money that flows through those accounts is dirty or suspicious isn't known. But 12 offshore banks identified in the report have moved billions of dollars through U.S. correspondent accounts in the past several years.
The vulnerability of the U.S. banking system has been a concern since a scandal involving about $7 billion in suspicious Russian funds that moved through three accounts at Bank of New York Co. came to light in 1999. Bank of New York hasn't been charged with any wrongdoing. The new report suggests such concerns are far from limited and raises questions about the ability of banks to control the billions of dollars that flow through them electronically each day.
“U.S. correspondent banking provides a significant gateway for rogue foreign banks and their criminal clients to carry on money laundering and other criminal activity in the U.S.,” the report said.
Many of the banks named in the report said they have already taken steps aimed at preventing abuses of their correspondent bank accounts.
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