Tuesday, September 22, 2020

The FinCEN Files Scandal

Rogue banks are in the spotlight again. 

Leaked documents from the US Financial Crimes Enforcement Network (FinCEN) – the people at the US Treasury who combat financial crime – involving about $2 trillion of suspicious transactions have revealed how some of the world's biggest banks have allowed criminals to move dirty money around the world.

These banks such as JPMorgan Chase, HSBC, Deutsche Bank, Standard Chartered Bank, Bank of New York Mellon and more, not only turned a blind eye but they have immensely profited from the dirty money transactions. 

It’s alleged that BNY Mellon, for example, moved more than $1 billion for the financier behind Malaysia’s 1MDB political scandal, and JPMorgan processed more than $50 million for Paul Manafort, the former campaign manager for US President Donald Trump.  






The FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing. 

These documents are some of the international banking system's most closely guarded secrets. Banks use them to report suspicious behaviour but they are not proof of wrongdoing or crime. 















They were leaked to Buzzfeed News and shared with the International Consortium of Investigative Journalists, which distributed them to 108 news organizations in 88 countries – and disclosing activities that banks don't want the public to know about. 

A BBC News report had given us insights into some of these activities: 

HSBC allowed fraudsters to move $80 million of stolen money around the world, even after it learned from US investigators the scheme was a Ponzi scam. 

JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it. The bank later discovered the company might be owned by a mobster on the FBI's 10 Most Wanted list. 

Evidence that one of Russian President Vladimir Putin's closest associates used Barclays bank in London to avoid sanctions which were meant to stop him using financial services in the West. Some of the cash was used to buy works of art. 

The husband of a woman who has donated £1.7m to the UK's governing Conservative Party's was secretly funded by a Russian oligarch with close ties to President Putin. 

The UK is called a "higher risk jurisdiction" and compared to Cyprus, by the intelligence division of FinCEN. That's because of the number of UK registered companies that appear in the SARs. Over 3,000 UK companies are named in the FinCEN files - more than any other country. 

Chelsea FC owner Roman Abramovich once held secret investments in footballers not owned by his club through an offshore company. 

Deutsche Bank moved money launderers' dirty money for organised crime, terrorists and drug traffickers. 

Standard Chartered moved cash for Arab Bank for more than a decade after clients' accounts at the Jordanian bank had been used in funding terrorism. 

The above illustrates all too clearly that existing regulations and bank compliance processes are grossly inadequate. 

And according to the ICIJ, in the US, almost 200 banking entities filed suspicious transactions.


Part of the list of 200 US banking entities. Data from ICIJ

By law, these banks have to know who their clients are  it's not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

Scandalous – that’s what it is!

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