Compass World: Cash These Hands
The estimated amount of money laundered globally is about 2-5% of global GDP, or anywhere between $800 billion to $2 trillion USD per year.
From President Trump’s elusive tax returns to the anti-corruptions crackdown in Latin America to the stubborn traces of autocracy in Africa, white-collar crime has untold layers.
White Collars, Red Hands
Recent information leaks such as the FinCEN Files and the 2016 Panama Papers illustrate the sheer scope of the problem. The FinCEN Files, obtained by Buzzfeed News from the U.S. Treasury’s Financial Crimes Enforcement Network, revealed more than 2,100 secret bank reports detailing how major U.S. banks move dirty money.
In Mexico, where harmful stereotypes of cartels and street violence abound, lurks a more subtle but equally dangerous type of crime. Voters applauded Mexican President López Obrador’s heavy-handed approach to undercutting corruption in his platform, and since taking office in December 2018, Obrador has been vocally outspoken about his beliefs.
“I maintain that the greatest damage to Mexico has been done by white-collar criminals,” he said.
Last month, Emilio Lozoya, the former head of the state oil company Pemex, accused former President Enrique Peña Nieto of “creating a scheme of corruption in the federal government.”
In Latin America, more than a dozen current and former heads of state face corruption charges. Peruvian President Martín Vizcarra faces impeachment charges on the misuse of public funds and obstruction of justice, while former Peruvian president Alan Garcia shot himself in the head after being implicated in a scandal involving the Brazilian conglomerate Odebrecht.
Technology adds an extra layer to an already-complicated onion. Between the years 2016 to 2018, the Federal Trade Commission registered an 11.4 percent increase in identity theft complaints, and data breaches in the government or military sector grew 25 percent between 2017 and 2018—and that was all before COVID-19.
Disaster Capitalism, Inc.
When the COVID-19 pandemic hit, front-line workers found themselves facing supply shortages. (UN Women Asia and the Pacific/Flickr)
When the COVID-19 pandemic hit and the world shut down in March, many governments inadvertently left the doors wide open for white-collar crime.
A myriad of social problems, including business shutdowns, meant that large amounts of money needed to be moved around very quickly. Hospitals needed medical equipment; schools needed government grants. Relief aid was an easy target.
In South Africa, the government released a relief package equivalent to $30 billion, and they implemented the Temporary Employer/Employee Relief Scheme. However, not all the money ended up where it should have. Private firms claimed benefits on behalf of oblivious and deceased employees and pocketed the cash. Emergency procurement regulations enabled government officials to make millions through underhanded deals with opportunistic companies.
In Kenya, at least 15 top government officials and businesses are under fire for the alleged misuse of millions meant for medical supplies. Around $2 billion was set aside for public protective equipment, but health workers have complained about shortages. In India, the prime minister has refused to make transparent the details of pandemic relief donations.
Additionally, government officials are slower to investigate. Without the free range of mobile access that these investigations can demand, pursuing inquiries is difficult. For example, COVID-19 has limited the Malaysia Anti-Corruption Commission’s ability to go out into the field and conduct briefings.
Online business dealings create the perfect climate for malicious business sharks and criminals to take advantage of inexperienced owners who can’t perform their due-diligence. With the transition to remote work, exploitation of remote access was the root cause of reported ransomware incidents. Since March, researchers have observed a 47 percent increase in the severity of ransomware attacks and a 35 percent increase in funds transfer fraud and social engineering claims.
We’ve Got You Covered (Up)
Donald Trump hinted that he would grant Michael Flynn a full pardon.
(George Frey/Getty Images)
So where are the riots, the protests, the revolts? White-collar crime is not an insignificant issue; in fact, the cost of street-level crime pales in comparison.
In America, property crimes like burglary, larceny, and theft cost the country around $16 billion a year, while white-collar crime costs victims an estimated $300 billion to $800 billion. Who’s really being robbed?
As the place with the biggest banks and with corporations that dominate the world, U.S. financial action—or the lack of—often reverberates around the globe.
But the U.S. has reached an all-time low in federal white-collar criminal prosecutions since tracking first began with the Reagan administration. Obama’s presidency saw a peak of 10,162 prosecutions in 2011, while Trump’s administration has consistently averaged around 5,800 a year.
This shouldn’t come as a surprise, though, considering that Trump oversees the Justice Department and its investigations into white-collar crime. Recently, Trump supported leniency for his former campaign adviser Roger Stone and former national security adviser Michael Flynn, both of whom were accused of lying under oath. Earlier this year, Michael Milken, Eddie DeBartolo Jr., and nine others were granted presidential clemency.
The message being communicated is clear: white-collar crime doesn’t really matter. And when the president refuses to show his tax returns—a tradition that every U.S. president since Nixon has adhered to—and gets away with it, the problem becomes systemic.
It’s a problem rooted in the country’s very foundations, starting with the glorification of capitalism and the “self-made man,” the “bootstraps” adage that corporate businessmen parrot. The lack of visible, bleeding victims. All this and more has contributed to the American public’s alarming disinterest in white-collar crime.
But there are victims. They’re everywhere. They just don’t know it.
“If we continue to serve as a popular haven for global kleptocrats, maintain weak bribery prohibitions, allow big dirty money to flood our elections, secure implicit immunity for the upper class, allow corporate executives to commit crimes and walk away with no or very, very light sentences,” Jennifer Taub, author of Big Dirty Money: The Shocking Injustice and Unseen Cost of White Collar Crime warns, “we will continue to be the petri dish for another future corrupt, organized crime tied, friend to all dictators, lying cheating, megalomaniac American president.”
In other words, eat the rich.