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Money Laundering and Drugs in Romania and Spain

I was in Timisoara Romania last week. Timisoara is a city of roughly 320k people on the Western edge of Romania. On the drive in to the city I was struck by the huge number of different banks I kept passing.

From one corner of the central square eight different banks were in sight of each other: RBS, UniCredit Tiriac, GEC Bank, CITI, Banca Transyvania, JTP Bank, ING, Volksbank and BCR (which is Erste – the Austrian bank). Elsewhere in the small city centre I also noted Raiffeisen Bank (another Austrian), BRD (which is actually Societe General), Piraus Bank (Greek).  I also noted both PriceWaterhouseCoopers and Deloitte.

Now Timisoara is one of Romania’s larger cities, though still only 320K. It does also have half a dozen international manufacturing plants.  So by Romanian standards it is affluent.  However, nice as it is to have manufacturing in a city, it does not make everyone rich.  So you do have to ask why quite so many banks? Surely they are not all there to compete for the deposit business of the city’s working class, nor even of their more well paid managers?  When I asked a group of a dozen of the city’s affluent professional class about the number of banks, they smiled and said, didn’t I know it was because everyone in Timisoara was so very rich. So I did a little poking around and found this rather timely article in the EUobserver reporting on this study from EUROPOL which is itself the distillation of 70 000 pages of intelligence from different police forces gathered over the last two years. The headline of article and report is that,

“Southeastern Europe is becoming the main gateway for smuggling drugs, guns and people into the EU….”

By Southeastern Europe it means mainly Albania, Romania, Hungary and Ukraine. The article notes that Romania and Hungary are a principle focus of drug smuggling because of their long and poorly policed borders and their application for admittance to the Shengen group of nations which allows passport free travel between member countries. I spoke to a Romanian journalist who readily confirmed what I had previously been told, that Romania has become a major route for Heroin transport into Europe. Coming ashore in the Black Sea and then moving by road – the so called Black Sea Route, is central to Heroin and increasingly for Cocaine into Europe. From Romania the drugs have then to pass through Hungary before getting to Austria and the beginning of the affluent markets for drugs. Timisoara is the last city before crossing the border into Hungary.

Wherever there are drugs there have to be banks in which to put the profits. Banks don’t like such insinuations of course. But on the other hand the is no getting around the fact that there would be no viable drug business if the money could not get into the financial system. One way or another banks DO launder all the world’s drug money. The first and most difficult part of the laundering process, ‘placement’, is getting the cash in to a bank. Once in, its a matter of disguising it’s provenance. By far the best way of placing dirty money is to have a willing business or bank, or both.

There are a lot of banks in Timosoara. What is more a lot of those banks are owned by and part of European banks – especially our friends the Austrian banks. In fact if you look at the ownership links of Austrian and Greek banks (See Piraus Bank for example) you see a clear pipeline running from Ukraine westwards to Romania and Austria.

This is no kind of proof of course, but it did set me to looking under more rocks. And under one I came across this business which says it specializes in creating Financial Trusts in, among other countries,  Romania.  Now Financial Trusts and Foundations are JUST the kind of thing which a friendly broker or Lawyer can set up in order to accept and hide dirty money.

The same company helpfully lists the countries in which it can facilitate setting up Trusts  and Foundations:

Corporation formation in: Switzerland, Cayman Islands, British Virgin Islands, Thailand, Ireland, Holland, Hungary, Mauritius.

Trust formation in: Switzerland, Holland, Cayman Islands, British Virgin Islands, Nova Scotia, Belize, Isle of Man; and Partnerships, Scotland.

Foundation formation in: Switzerland, Curacao, Liechtenstein, Panama;

I couldn’t help noticing Ireland making its appearance among the big boys of Cayman Islands, BVI, Switzerland, Liechtenstein and Panama.  (For those who are surprised at Panama, don’t be. The links between Panama and Israel are the really interesting ones. Panama is a hub for arms and laundering)

As I say none of this is anything but innuendo and supposition. But you do have to wonder at a small city stuffed to the gills with banks from Western and Southern Europe.

It reminds me of the tiny and very much contested Spanish enclaves of Ceuta and Melilla in Morocco. They are home to about 65K people each and are both very poor with high unemployment.  They are also a focus for illegal immigration. So why would Spain hang on to them despite Moroccan anger, Muslim unrest and constant problems with illegal immigrants?

Well if you look them up Melilla has seven different Spanish Banks including branches of Santander, BBVA and Banco Popular which also advertises its services for Private Banking customers wishing more discrete private banking arrangements in Melillo. The place is dirt poor!  Ceuta also houses seven banks.  In neither place is there conceivably a demand from the local populace for two never mind seven banks.

What are they all doing there? According to Wikileaks papers from the American Embassy in Morocco and the Moroccan government the enclaves are major routes for Cocaine coming into Europe from South America.  The route as far as I can tell comes ashore in Angola, goes cross country and leaves for Spain from Ceuta and Melillo. The two enclaves are also a route for Hashish. Once the drugs are about to head into Europe there is going to be the need for a lot of banking. And all those Spanish banks just happen to be there.

The poor old Portuguese could really do with some cash for their banks but being only in Angola they would only get a poor share.

Banks launder money. They do so knowingly. They claim not to of course. But the evidence is that they are  drawn to the very places where there is money in dire need of laundering. In so doing they are central to the drug crime business. They enable and enrich the most violent criminals. And they do it for profit.

24 Responses to Money Laundering and Drugs in Romania and Spain

  1. Martin May 9, 2011 at 8:49 am #

    Did you also notice the X6's, Astons and other ostentatious shows of wealth. Hope you had a nice time out there.

  2. Martin May 9, 2011 at 8:56 am #

    Arad/Timisoara the new Puerto Banus 🙂

  3. Golem XIV - Thoughts May 9, 2011 at 9:16 am #


    Sadly I wasn't there long enough to see what it was really like.

    The only other little detail was the porousness of the airtport. Half a dozen fighter jets left outside in the weeds and rain in front of hardened cold war hangers themselves overgrown by grass and trees. There was no security and virtually no perimeter to the airport. You could have landed and taken off again in a decent sized plane without drawing much if any attention.

  4. Chris May 9, 2011 at 10:53 am #

    The drugs and banking cartels are opposing sides of the same coin. As in the case of Martin Woods and Wachovia, I doubt we'll see any meaningful action from the banking "industry" itself, nor its associated offshore network.

    Will governments dare to investigate and prosecute their very own paymasters? Almost certainly not, but their hands might be forced if there was more sustained pressure from the media. Sadly, articles such as Golem's and the recent Guardian rehash of Bloomberg's Wachovia story are few and far between.

    Antonio Maria Costa's allegations that the banks laundered USD352bn of drugs money at the height of the financial crisis seemed to dissapear without trace – perhaps you could try interviewing him Golem?

    Thanks btw for another timely and hard-hitting piece.

  5. ahimsa May 9, 2011 at 11:30 am #

    @ Chris

    Catherine Austin Fitts has written very good comment on drug money laundering.


    It's been going on for a long time.

  6. Chris May 9, 2011 at 11:52 am #

    Thanks for the link ahimsa – down the rabbit hole we go….

  7. Ken May 9, 2011 at 12:35 pm #

    Intersting article but its not really new. Yesterday's mobster is today's banker. It's their view of evolutionary progress. You can be sure that mobster children and banker children are sharing classes now at Harvard, making connections.

  8. M7 May 9, 2011 at 5:27 pm #

    I realise this video link doesn't fit with the theme of this post but it's a pretty good watch. A human perspective people overlook, and a moral process which probably carries more value than any steadfast religion ever could.


  9. gyg3s May 10, 2011 at 7:23 am #

    Not far away is another interesting country, Bulgaria.

  10. Martin Slavin May 10, 2011 at 9:35 am #

    Read: The Washing Machine, Money,crime and terror in the offshore system, Duckworth, 2006, http://bit.ly/maYcSg

  11. Hawkeye May 10, 2011 at 12:53 pm #

    A bit off-topic, but thought I’d give 24K a plug after just seeing his video on the Max Keiser site:

    Zombie Bank Death Squad

    Powerful & eloquent Epilogue written by Golem, too.

    The tune's growing on me now.

    Power to the Urban Indian!

  12. John May 10, 2011 at 3:00 pm #

    How much does it cost to set up a bank?

    Where I live, SE Asia, it costs $10 million (give or take, but you need $10m capital).

    That sounds like a lot of money to most ordinary people, but if you have a billion dollars to get rid of in say "investment in a golf course, hotel and luxury resort" it's not so much.

    So you can save a lot of money by setting up your own bank. You get all the benefits: cheap inter-bank lending, bringing in the money for almost free etc and you get the "respectability" that the mirror glass and fake marble facade engenders in the public consciousness.

    I've seen 28 new banks open in a city of 600k in the past four years. Some of them don't even pretend to be real banks – a friend went into one looking for a loan only to be told that they didn't give loans.

  13. Ken May 11, 2011 at 11:34 am #

    @John Spot on! Like they invaded Hollywood (when was the last time they got a bad rap in a movie), they now own the banks. If you run a protection racket for streets you are a mobster, if you run one for governments you are a bankser.

  14. zbds May 11, 2011 at 4:08 pm #

    Thanks Hawkeye 🙂

    I wrote to Max to see if I could gleam some good links for speeches from the CEOs of the twins or Blythe Munster as the dynamic duo don't half go through information. I in no way thought he would post it. If I did I wouldn't have given half the plot away, or mentioned badass kung fu fighters, they are but it's not my place to say such a thing and they're not that type of people. They are the last people you'd ever see fighting. I would have still mentioned my Nan mind as she's great.

    He has added 3,000 hits to my video in 2 days though and everybody watches it till the end near enough according to youtube. Sweeet!

    I still get the odd person watching it from police online although they moderate anything I say since i posted the video of the cozzer in Fortnum and Mason saying maybe nobody will get arrested if the go LEFT. Then you watch all the UK uncut folks sheepishly go left arm in arm to a kettle and night in a cell while the black bloc smash the place up but there as many press as there are blac bloc and a handfull of police out of the 4,500 doing f all.

    Didn't go down well, I fell into the divide and rule again :/

    Hawkeye, or anybody else if you have any good links or quotes I'd love to hear them as the plot is done and it's on to the words and google searches can be time consuming, or is that just me being lazy?

    G, any pics of the rusty planes? Sounds amazing.


  15. fitzy103 May 11, 2011 at 4:17 pm #


    Tremendous stuff as always. Never really thought about it before, but what kind of banking services are there in UK protectorates such as Bermuda?

    Also, a bit off topic, but what did you think of the Irish government just taking peoples pensions yesterday? It’s unbelievable… They won’t tax companies, but they just help themselves to those who have been prudent enough to save something for their old age. It could be the opening of Pandora’s Box. Once they start doing that, what else can they help themselves to?

  16. Golem XIV - Thoughts May 12, 2011 at 6:26 pm #


    British protectorates are teh inner-most circle of the off-shore tax and regualtoin avasion world. Not Bermuda so much as Caymans and Virgin Islands.

    As for the actions of the Irish government they are those of men wholly without honour, without loyalty, without anything redeeming at all.

  17. 24K May 14, 2011 at 11:09 pm #

    Talley sticks boyeee

    Max Keiser Radio Plug

    Hawkeye, Lyrics

  18. Mrs de Winter May 15, 2011 at 11:33 am #

    Great post, Golem…

  19. Golem XIV - Thoughts May 16, 2011 at 8:11 am #


    appologies for not replying. i don't know what happened but I did write a reply but it seems not gone never to be seen again.

    Anyway, what I wrote was simply that the heart of the tax evading, off-shore world are the British protectorioates but not so much Bermuda. More teh British Virgin Islands and Caymans.

    The absolute best book on the subject is Shaxon's treaseure Islands. I am writing a review of it at the moment.

    Mrs de Winter,

    Thank you.


    You're message is spreading! Deservedly so!

  20. 24K May 16, 2011 at 5:49 pm #

    Thanks dude.

    I was checking out the conception of ZBDS in Japan Is Going To Blow


    [Hope Jamie G's ok. Shame they weren't prepped with better Slogans as I see a missed live advertising slot. Only one girl has mentioned the bankers. Imagine if that's all they chanted all day with placards that read "Zombie Bank Death Squad" or "We are losing our future by bailing out the rich". I'm sure you can think of better.

    That could've been my dream day of hardcore advertising. I'm glad they voted yes to be honest, maybe my day will come then, just gotta figure out how to explain that to all the students…

    They could be my weapon of mass instruction.

    I just heard the reporter reading all the signs…

    Can you imagine? That beats Rich and me handing out leaflets any day. That could be a tipping point.

    A sign of things to come.]

    I couldn't convince the students, my dryness was wasted on them 🙂

    I think I fluked the first video a bit. Not gonna have 500,000 extras next time… If it makes one person make an effort like you made me make an effort though.

    Happy days.

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