U.S. Treasury Secretary Steven Mnuchin slandered cryptocurrencies at a press conference earlier this month. Mnuchin attempted to smear the industry with associations to money laundering and funding terrorism. He said he has “serious concerns” that bitcoin could be misused “by money launderers and terrorist financiers.”
As if to underscore the part of the picture Mnuchin is leaving out, the very next day KeyCorp shares fell on news the Ohio bank has uncovered $90 million worth of fraud by a payroll processor.
The reality is that mass fraud and nefarious money laundering schemes are endemic to legacy banking without bitcoin’s help. And the truth is that the U.S. government itself is more likely than anyone to use cryptocurrency to fund terrorism.
Though some have adopted bitcoin, criminals have no trouble using the legacy banking system to launder money. Oftentimes the banks are directly involved in the illicit operations themselves.
1. Wells Fargo (2010, $378 billion laundered) – In 2010, Wells Fargo-acquired Wachovia had to pay $160 million in penalties for failing to apply money-laundering controls. And that allowed the Mexican drug cartel to launder $378 billion through its bank.
2. JP Morgan (2018, $5.3 billion fine) – In October 2018, the U.S. Treasury fined JP Morgan $5.3 billion for violating “Cuban Assets Control Regulations, Iranian sanctions and Weapons of Mass Destruction sanctions 87 times.”
3. HSBC (2012, $1.9 billion fine) – In 2012, HSBC paid $1.9 billion in fines for laundering hundreds of millions of dollars for terrorism,