Money laundering: JP Morgan in the frame for Venezuelan drugs link

Moral Tone’s employers face difficult questions about Venezuelan drug monies

Those slightly dense British politicians convinced that American attacks on our banks involved in drug-money laundering were motivated by envy may be in for a few jolts in the next few weeks, I hear. The first of these comes in the shape of US regulators being on the verge of filing such charges against that most un-British of banks (save for the presence of Tony Blair) JP Morgan.

While the extent of the inquiry taking place into JPM is for the moment vague, I’m told the liabilities could be gigantic. Morgan has already gone public to say it expects ‘heightened scrutiny’ of its compliance with laundry regulations. But I understad that, in turn, the Office of the Comptroller of the Currency is about to confirm it will examine Morgan activities and failures in detecting the use of its bank to render grubby drug money clean.

This new investigation does not, apparently, involve Colombia, but rather Venezuela. Although the Venezuelan government has trumpeted one major blow after another against drug traffickers, recent investigations suggest that the claims are exaggerated. And poor diplomatic relations with President Hugo Chávez of Venezuela, mean that the reach of American drug agents is limited in the region.

In September 2011, Barack Obama signed a memorandum designating Venezuela as a country that failed to meet international obligations to fight drug trafficking. He cited a federal report that concluded that the country was “one of the preferred trafficking routes out of South America” and had a “generally permissive and corrupt environment.”

Earlier this year, British bank HSBC set aside $700 million to cover investigations that could result in one of the biggest ever fines. A U.S. Senate report criticized a “pervasively polluted” culture at the bank, its panel examining transactions tied to Mexico, Iran, the Cayman Islands and Saudi Arabia. And last month, New York’s banking regulator reached a $340 million settlement with British bank Standard Chartered after the regulator investigated transactions tied to Iran.

Both events were attacked by London Mayor Boris Johnson and British Chancellor George Osborne. How we Brits wish the gobby end of the Conservative Party would engage brain before tongue.