Drugs and Money: Laundering Latin America's Cocaine Dollars

By Robert E. Grosse | Go to book overview

Chapter 8

The Bank of Crooks and Criminals, Inc., 1988–90

The Bank of Credit and Commerce International (BCCI) was born in 1972 in Abu Dhabi at the beginning of the Middle East’s oil-based boom in wealth and power, and it was put to rest in London and New York on July 5, 1991, after the bank pled guilty to 11 counts of money laundering in a $U.S. 15 million Miami court case (in 1990) and was on the verge of indictment in New York in a $U.S. 30 million case alleging fraud, money laundering, and criminal conspiracy. The bank had been founded by a Pakistani businessman, was owned by a number of Arab businesspeople (see Figure 8.1), and grew to employ more than 14,000 people in 73 countries around the world. This entire story has been told several times, 1 thus the discussion here focuses on the money laundering activity that was led by the bank’sofficers in Tampa, Miami, and Panama.

BCCI entered the United States in 1978 by opening an agency in New York. This legal form allowed the bank to make loans to domestic and foreign clients, but could only take deposits from non-residents. Additional agencies were set up in Miami and Los Angeles in 1982.

This presence was not adequate for the expansion intended by the bank’s founder, Agha Hasan Abedi, so an attempt was made to purchase a bank in New York. This attempt was not permitted by U.S. federal regulators, who were not satisfied with the adequacy of regulation on the bank’s parent firm, which was (legally) headquartered jointly in Luxembourg and the Cayman Islands.

BCCI moved ahead covertly in 1982 by purchasing Financial General Bankshares (later, First American Bankshares) in Washington, D.C., through several wealthy Arab investors acting as intermediaries. This investment became the centerpiece of a major governmental investigation, since the BCCI claimed not to be involved in the venture but subsequently was proven to be the beneficial owner and controller. 2 In fact, the closure of the bank in July 1991 was tied to

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