The Merchant of Death and Loopholes in U.S. AML Laws
November 4th, 2011
November 4th, 2011
Yesterday Heather Hobson, the jury forewoman in the trial of Viktor Bout, looked the infamous illegal arms dealer in the eyes and announced the jury’s final finding of guilt.
Bout, a former Soviet air force pilot, has been nicknamed the “Merchant of Death” for his role in funneling weapons to terrorists, including the Taliban and Al Qaeda; trans-national criminals; and armed combatants locked in some of the world’s bloodiest conflicts. Though Bout has claimed on a Russian radio program that he has “never gotten into the arms trade,” according to European intelligence sources and documents from an African country uncovered by the Center for Public Integrity, Bout “ran guns for the Taliban on behalf of the Pakistan government.” UN monitors have revealed Bout has shipped “contraband weapons to rebel movements in Angola and Sierra Leone and to the rogue regime of Charles Taylor in Liberia” and has also operated in Cameroon, Central African Republic, Democratic Republic of Congo, Equatorial Guinea, Kenya, Libya, Congo-Brazzaville, Rwanda, South Africa, Sudan, Swaziland and Uganda
In 2008, Bout was arrested in Thailand after an international sting operation led by American undercover agents posing as Colombian FARC rebels convinced the Russian businessman to sell them missiles and rocket launchers. The Justice Department quickly sought his extradition, claiming the weapons would have been used to kill Americans in Colombia. But a reluctant Thailand, not wishing to step on Russia’s toes, refused the extradition request for two years. Finally, almost exactly one year ago, Thailand unexpectedly extradited Bout to the United States. That day, a motorcade whisked him to Don Maung airport and onto a 20-seat American aircraft.
After a three week trial in Federal District Court in Manhattan, a sober Bout maintained his “‘deadpan’ expression and ‘very intense, furious’ eyes” when the jury sentenced him to a mandatory minimum of 25 years in prison. The jury found Bout guilty of all four of the charges levied against him, including: conspiracy to kill Americans, conspiracy to kill U.S. government officers and employees, conspiracy to acquire and use antiaircraft missiles, and conspiracy to provide material support or resources to a designated foreign terrorist organization. As you may have noticed, none of these charges include his alleged involvement in the illegal transport of arms.
In an illuminating article, Scott Stedjan, a senior policy adviser at Oxfam America, and Winny Chen, a senior associate at Human Rights First, write this isn’t entirely unusual. They observe that “only 52 governments have any form of controls on arms dealers operating in their countries, and of that, less than half have criminal or monetary penalties associated with illegal gun running.” Stegjan and Chen note that while the United States has relatively comprehensive laws governing these activities, “if an arms dealer circumvents U.S. legal jurisdiction, officials have few tools at their disposal to stop them.”
The same is true—worse actually—for the financial side of things. And in this regard, the U.S. law is not so comprehensive. According to U.S. anti-money laundering laws, there is a difference between what is criminalized if it occurs inside U.S. borders and what is criminalized if it occurs outside them. This isn’t true for all criminal activities, but it is true for many crimes. Which means that it is perfectly legal for U.S. banks to accept the profits from some crimes, provided the original crime occurred in another country, when it would be illegal to do so if the same crime was committed in the U.S. A bill recently proposed by Senators Chuck Grassley (R-IA) and Dianne Feinstein (D-CA) would fix this large loophole in U.S. law. Bill S. 1731, the Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2011, would make all felonies trigger crimes for a money laundering charge, no matter where in the world a person committed the crime.
As Raymond Baker has noted in Capitalism’s Achilles Heal, “when we remain legally open to many forms of dirty money we do want, we remove the possibility of successfully curtailing a few forms of laundered money we don’t want. The global anti-money laundering regime… remains ineffective because it is narrowly defined, easily circumvented, and poorly enforced.” If the world is serious about putting men like Viktor Bout behind bars, we need to get serious about the laws that govern criminal activities and the financial proceeds of those activities. Without a comprehensive framework of those laws, we will remain impaired, weak, and unable to respond to the growing threat from the world’s Merchants of Death.
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🚨@FinTrCo & 36 global civil society orgs call for US to tackle its black hole of financial secrecy undermining demo… https://t.co/c9YXSj1fUm
- Wednesday Mar 29 - 2:32pm