By: Matthew Arndt, CFA, CPA, CFP | February 5, 2010 | The Regulators, Wall Street Ethics

Just when you thought the ill stench wafting from Wall Street couldn’t get any worse. A recent U.S. report details how large American banks like Citigroup, Bank of America, and JP Morgan Chase facilitated the laundering of hundreds of millions of dollars on behalf of corrupt foreign officials who were subjects of criminal investigations into charges of money laundering, bribery and extortion, and who publicly associated with people like Libyan leader Col. Muammar el-Qaddafi. Supported by bank statements and internal e-mail messages, the Senate report details how the large banks ignored controls intended to prevent money laundering.

The report details how, between 2004 through 2008, high-risk clients from corrupt countries used American banks, real estate agents and lobbyists “to conceal, protect and utilize their ill-gotten gains” to purchase such items as: several C-130 Hercules military transport planes (with United States government permission), Hummer H2 armored vehicles, Ferraris, a $38.5 million Gulfstream G-5 jet, a $30 million home in Malibu, Calif., and invites to the 2007 “Kandy Halloween Bash” at the Playboy Mansion. It also describes how former President Omar Bongo of Gabon, carried a suitcase containing $1 million in shrink-wrapped bills into New York for his daughter to buy a Manhattan apartment.

Obviously, these banks used absolutely no discretion when deciding who they would do business with as long as the money kept rolling in. Could any of this money have supported state-sponsored terrorism? Where were the large banks planning on drawing the line? And our tax dollars are supporting these shenanigans?