The Bank for International Settlements (BIS), and the Third Reich Regime’s Financial Offshore money laundering
During the prelude to and the progression of World War II, the German Third Reich was supported by a network of financial manoeuvres that ensured the Nazist regime objectives were achieved in secrecy, including the laundering of funds and the extraction of wealth from occupied territories. Key figures in this system were Walther Funk, the Nazi Minister of Economics and president of the Reichsbank, and his associate, Hermann Schmitz of IG Farben. One of the institutions central to this network was the Bank for International Settlements (BIS), which was implicated in laundering Nazi party and Nazist Hierarchy funds, securing offshore transactions, and facilitating the financial interests of the Nazist regime, particularly through the involvement of the influential banker, Baron Kurt von Schröder.
Walther Funk: Nazi Financial Architect
Walther Funk rose to prominence within Third Reich Nazi Germany as the Reich Minister for Economics in 1938 and became president of the Reichsbank in 1939. As a close ally of Hitler and a dedicated member of the Nazi Party, Reich Minister for Economics Walther Funk played a critical role in coordinating Nazist Reich economic policy and the mobilization of German financial resources for war. Funk’s association with the BIS enabled the Nazis to carry out complex international transactions, ensuring that Germany could bypass certain economic restrictions imposed by other nations during wartime. Funk’s control of the Reichsbank also facilitated the laundering of illegal wealth, which was funnelled into Germany’s war machine. At the heart of this financial infrastructure, the BIS emerged as an important conduit for laundering Nazist Reich Hierarchy money offshore.
Hotel Maison Rouge
The Maison Rouge meeting, held on August 10, 1944, at the Hotel Maison Rouge in Strasbourg, was a pivotal moment in the Nazis’ efforts to secure their wealth and plan for a post-war future. This secret meeting, attended by prominent industrialists and Nazist Party Hierarchy officials laid the foundations for a complex covert scheme to launder Nazist Hierarchy money and establish an economic network that could finance the survival of Nazist Antisemite ideology after Germany’s defeat. The main objective of the Maison Rouge meeting was to transfer assets offshore and safeguard Nazi wealth, especially through neutral countries like Switzerland. According to declassified U.S. intelligence documents, the attendees discussed how German industrialists could smuggle funds out of the country and re-establish Nazi-friendly enterprises abroad, effectively creating a financial network to support future political activities. This was the beginning of long-term efforts to hide Third Reich Nazist Hierarchy criminal loot and evade post-war justice, which involved banks, companies, and other institutions across Europe and the Americas. Evidence of this meeting and its implications can be found in reports released by the U.S. State Department
declassified intelligence reports:
Grunge CIA National Archives
According to accounts of the Maison Rouge meeting (detailed in various post-war intelligence reports and later investigations), the Nazist planned to transfer significant funds, assets, and industrial knowledge to neutral countries and foreign subsidiaries of German companies. These funds were channelled through several key avenues:
Swiss Banks: Switzerland, known for its banking secrecy, played a central role in helping divert Nazist funds. Swiss financial institutions were believed to have facilitated the transfer and safeguarding of German assets, allowing Nazist leaders to secure wealth beyond the reach of Allied powers. Argentina and Other South American Countries: Nazist leaders and collaborators sought refuge in countries like Argentina, where sympathetic governments and existing networks allowed them to settle and transfer assets. Argentina, under President Juan Perón, was particularly known for its pro-German stance, making it a hub for Nazist exiles. Spain and Portugal: These Iberian countries, under neutral or pro-fascist governments, were used as channels for transferring Nazist assets. Spain under Francisco Franco and Portugal under António de Oliveira Salazar had relatively close ties with Nazi Germany, allowing them to serve as safe havens for both personnel and funds. Liechtenstein and Other Tax Havens: Tiny, neutral states with favourable banking laws, like Liechtenstein, also became conduits for Nazist wealth, where assets could be hidden or moved with relative ease.Corporate and Industrial Networks: German multinational corporations such as IG Farben, Krupp, and Siemens were involved in the long-term survival strategy. These companies had subsidiaries and investments in neutral or Allied countries, which allowed them to transfer assets abroad and maintain operations even after the war.
The Role of the BIS in Laundering Nazist Hierarchy Money
Founded in 1930, the Bank for International Settlements (BIS) was originally established to facilitate financial cooperation among central banks and to manage reparations from World War I under the Treaty of Versailles. However, during World War II, the BIS’s neutrality was exploited by Nazist Germany to move and conceal funds. The BIS board included representatives from various countries, including Nazist Germany, whose participation allowed the Third Reich to conduct foreign exchange operations, gold transfers, and even loan agreements despite the global conflict. Walther Funk, along with other Nazist financial officials, used the BIS to launder looted gold and other assets, including gold that had been stolen from the central banks of occupied nations. One notorious example involved gold taken from Belgium, Czechoslovakia, and other occupied countries, which was transferred to the BIS and subsequently funnelled to various international banks. This mechanism allowed Nazist Germany to maintain access to foreign currency and financial markets, crucial for sustaining its war economy. Additionally, the BIS facilitated the laundering of funds derived from Nazist war crimes. Some of the gold transferred to the BIS was later found to have included melted-down gold from the personal belongings of concentration camp victims, an atrocious testament to the degree to which the Nazist financial system profited from mass murder and the Holocaust.
Kurt von Schröder: The Banker of the Reich
While Walther Funk orchestrated Nazist Third Reich economic policy on a governmental level, another key figure in the laundering of Nazist funds was Baron Kurt von Schröder, a prominent German banker and industrialist. Schröder’s connection to the Nazist regime was deep and multifaceted. As an influential member of the Cologne banking dynasty J.H. Stein & Co., Schröder helped fund the Nazi Party’s rise to power, and he was personally involved in negotiations between German business elites and Adolf Hitler in the early 1930s. His role in these negotiations earned him significant favour within the regime. Schröder also had deep ties to the banking world outside of Germany. He was a key figure in the banking conglomerates with links to international markets, including those in the United States and Britain. His international influence allowed the Nazist Reich to conceal and transfer funds across borders, bypassing the financial isolation imposed on Germany during the war. One of the most significant of these activities involved the BIS, where Schröder, as a key financier, helped ensure that Nazi money could be hidden and laundered through international channels. Schröder’s firm was also instrumental in facilitating the transfer of assets from German-occupied territories back to the Reich. The wealth extracted from these regions—whether in the form of raw materials, financial reserves, or industrial assets—was often funnelled through Schröder’s bank and the BIS, ensuring the seamless movement of these resources back into Nazi hands.
What was Operation Safehaven
Operation Safehaven was a U.S. intelligence operation initiated during and after World War II, the U.S. Army branch Office of Strategic Service (OSS) tried to trace and recover Nazist assets that had been moved to neutral countries, particularly through offshore banking. The operation aimed to prevent the funds from being offshored and used by Nazist war criminals escaping Nuremberg. The program focused on several neutral countries, primarily Switzerland, Sweden, Spain, Portugal, and Argentina, where Nazi officials and collaborators had reportedly moved stolen assets, including gold, art, and financial holdings. Swiss banks, in particular, were heavily scrutinized, as they were known for their secretive banking practices and were a major hub for Nazi funds. Swiss financial institutions, such as UBS and Credit Suisse, were often mentioned in postwar investigations due to their alleged involvement in laundering and holding Nazi assets. The full extent of the operation’s success was limited by the complex nature of tracing the assets, the secrecy laws of these neutral countries, and the cooperation (or lack thereof) of their governments and financial sectors. However, significant funds were identified and some were eventually returned to victims or seized by Allied authorities.
The Post-War Legacy of Walther Funk and Schröder
At the end of World War II, both Walther Funk and Kurt von Schröder faced consequences for their roles in supporting the Nazi war effort. Funk was arrested and tried during the Nuremberg Trials. He was found guilty of war crimes and crimes against humanity, largely for his role in the economic plundering of Nazi-occupied territories and the Aryanization of Jewish assets. He was sentenced to life imprisonment but was released early in 1957 due to health reasons.
Kurt von Schröder’s fate was less severe. Although he was also arrested and tried, his punishment was relatively lenient, reflecting the complicated geopolitical context of post-war Europe. He served a brief prison sentence but was soon released, and he continued to maintain a presence in the business world in the years that followed, albeit without the prominence he enjoyed during the Nazi era.
The collaboration between Walther Funk, Kurt von Schröder, and the BIS illustrates how deeply intertwined Nazi Germany was with the international banking system. The exploitation of the BIS to launder money, coupled with the personal influence of figures like Schröder, allowed Nazi Germany to sustain its economy despite international opposition and sanctions. While both men faced justice for their roles in these financial crimes, their activities left a lasting stain on the legacy of international banking, and the role of the BIS during the Nazi era remains a subject of historical controversy.
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Similarities of Third Reich Nazist Money Laundering Schemes with Modern Money Laundering Networks
The methods used by the Third Reich Nazist to launder money and protect their assets offshore have striking similarities to modern global networks of tax fraud and money laundering. Today, multinational corporations and wealthy individuals exploit offshore tax havens, shell companies, and opaque financial systems to hide billions of dollars from tax authorities. These illegal practices deprive governments of critical revenue needed for public services like healthcare, education, and infrastructure, disproportionately impacting low-income citizens. According to recent estimates, tax evasion and illicit financial flows cost developing countries over $200 billion annually, and the total amount stashed in offshore accounts globally is estimated to exceed $32 trillion (National Archives). The Panama Papers and Pandora Papers revealed how elite networks use these mechanisms, facilitated by lawyers, banks, and intermediaries, to move money across borders in secrecy. Just as during WWII, modern financial secrecy benefits the powerful at the expense of the public, undermining economic equality and governance. The global network of tax fraud and money laundering today siphons off an estimated $500 billion annually from the global economy, according to numerous reports and investigations. This massive figure underscores the scale of illicit financial flows, where both wealthy individuals and corporations hide their profits in offshore tax havens. The Panama Papers and other leaks have revealed how these financial schemes are set up, often involving complex layers of shell companies and intermediaries, making it nearly impossible for authorities to track the full extent of the losses.
The Organization for Economic Co-operation and Development (OECD) and other global watchdogs estimate that tax fraud robs governments of billions, undermining their ability to fund essential services like healthcare, education, and infrastructure. In the U.S. alone, tax evasion costs around $1 trillion over a decade, while across Europe the gap caused by corporate tax shifting and avoidance could be as much as $50 billion annually.(National Archives).
In essence, much like Nazist Regime money laundering during WWII, modern-day tax fraud and illicit financial flows continue to undermine public finances on a global scale. These hidden funds deepen inequality, as governments struggle to provide public services for the majority of taxpayers and the wider population.
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https://doi.org/10.1787/70ee934c-en: The Bank for International Settlements (BIS), and the Third Reich Regime’s Financial Offshore money laundering
