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Mexico drug profits will continue to be laundered in London

Money laundering

El Chapo’s capture is meaningless in terms of stopping drug trafficking. Someone else will simply take his place. All that dirty money will still need to be freshly laundered. London, New York, corrupt hedge funds and banks worldwide are happy to take the money. And isn’t it so very curious that even though governments know full well about the dirty money, few if any criminal prosecutions happen. Oh, a few banks get fined, promise to sin no more, then continue doing what they were doing while regulators pretend not to notice. Why it’s almost like our entire international banking system is corrupt at the core.

The last time Guzmán was arrested, his business empire barely skipped a beat. In fact, as El País reports, it grew, expanding its market both at home and abroad. According to the U.S. Treasury Department, a quarter of all drugs consumed in the U.S. are now distributed by Guzmán’s Sinaloa cartel. The vast revenues generated by the cartel’s sales of cocaine, marijuana, and meta-amphetamine, both in the U.S. and around the world, are laundered through a complex network of 280 businesses in 10 countries.

At the beginning of the global financial crisis, Antonio María Costa, the former Under-Secretary of the United Nations Office on Drugs and Crime, warned that the European banking system had lowered its security barriers, opening the financial floodgates to drugs money. To this day not a single European government or politician has responded to Costa’s accusation that the European financial system was as good as saved by the global drugs trade — none more so than everybody’s favorite offshore tax haven, the City of London.

We’re talking hundreds of billions of dollars. But like a junkie needing the next fix, our banking system doesn’t care where the money comes from or what they have to do to get it.

If Mexico’s Drug War ended tomorrow, all of these stakeholders would take a financial hit. And that is the prime reason why the U.S.-led War on Drugs, now in its 46th year of outright failure, is unlikely to end any time soon, despite its attendant costs, including the complete breakdown of law and order in the world’s 15th biggest economy.

Is it an aberration or design feature?

Rather clearly, elites across the world benefit hugely from the illegal drug trade and are in no hurry to change it. Except maybe when their kids start getting addicted or get caught up in the violence. Otherwise, hey, the money flows in and it’s other people getting killed, maimed, imprisoned, and addicted.

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