FinCEN Files: Leak of Thousands of Bank Reports Exposing Billion Dollar Laundering The NY Journal

The State September 21, 2020 0 Comments BANKS, corruption, Delinquency, Economy, money, politics

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Some of the world’s largest banks have allowed criminals and corrupt politicians to move dirty money around the globe

Leaked documents that account for transactions totaling some US $ 2 trillion reveal how some of the world’s largest banks have allowed criminals and corrupt politicians to move dirty money all over the world.

It’s about the FinCEN Files, which include more than 2,100 “suspicious activity reports” prepared by banks and other financial institutions and submitted to the Financial Crime Control Network of the United States Department of the Treasury (FinCEN, for its acronym in English).

These confidential files were obtained by the US news portal BuzzFeed News, which shared them with the International Consortium for Investigative Journalism (ICIJ), the organization that also coordinated the investigation of the Panama Papers.

And 400 journalists from 108 media outlets in 88 countries – including the BBC’s Panorama program – passed 16 months pulling the strings that they found in those files, analyzing millions of bank transactions, investigating court records and interviewing investigators, victims and alleged implicated.

The result of these investigations, which in the words of the ICIJ is “a true world tour of crime, corruption and inequality, with leading roles for politicians, oligarchs and scammers, and key roles for bankers that serve them all ”, will begin to be published as of this Sunday by the partners of the consortium.

In Latin America these include media such as Proceso, Quinto Element Lab and Mexicanos Contra la Corrupción y la Impunidad, in Mexico; Profile, Infobae and La Nación, in Argentina; Armando Info, in Venezuela; Connectas and El Espectador, in Colombia; Convoca, in Peru and LaBot, in Chile, among others.

What’s in the FinCEN Files?

Most of the documents contained in FinCEN Files are “suspicious activity reports “ (SARs) sent to US authorities between 2000 and 2017.

These documents are some of the best kept secrets in the international banking system and are used by banks to report suspicious behavior by their clients.

Example SAR (suspicious activity report)

SARs do not necessarily refer to crimes nor do they constitute evidence of crimes.

But any concerns related to transactions made in US dollars should be reported to FinCEN, even if they take place outside the US.

Therefore, the repercussions of the investigations derived from the FinCEN Files will be felt by all world.

“From the secret files, the journalists traced the dollars of a drug dealer from Rhode Island, USA, to a chemical laboratory in Wuhan, China; they explored scandals that paralyzed the economies of Africa and Eastern Europe; they identified grave robbers with Buddhist relics that were sold to galleries in New York; and they followed Venezuelan tycoons who diverted money from public housing and hospitals“, Says the ICIJ about some of the investigated stories.

FinCEN, for its part, said the leak could affect US national security, compromise investigations and threaten the safety of reporting institutions and individuals.

Why does it matter?

If someone plans to profit from a criminal enterprise they must find a way to launder money.

Money laundering is the process of taking dirty money – the product of crimes such as drug trafficking or corruption – and putting it in an account at a respected bank where it will not be linked to the crime.

Canary Wharf, London — The leak will generate uncomfortable readings for many banks.

The same process is necessary if you are a Russian oligarch who has been sanctioned by Western countries to prevent money from entering the West.

Banks are supposed to make sure they don’t help clients launder or move money contrary to the rules.

By law, they have to know who their customers are. And it’s not enough to file a SAR and keep getting dirty money from customers while waiting for the authorities to take care of the problem: if a bank has evidence of criminal activity, it should stop moving the money.

Fergus Shiel of the International Consortium of Investigative Journalists (ICIJ), said the leaked files give an “insight into what banks know about the vast flow of dirty money around the world. “

And according to Shiel, the documents also highlight the extraordinarily large amounts of money involved.

The documents in the FinCEN Files cover about $ 2 trillion of transactions, but they are only a small proportion of SARs submitted during the period.

What are the main banks involved?

The leak will generate uncomfortable readings for some of the the world’s leading banks.

These are some of the revelations that they surely would rather have kept out of the public eye.

HSBC allowed scammers to move millions of dollars of stolen money around the world, even after learning from US investigators that it was part of a scam.
JP Morgan allowed a company to move more than $ 1 billion through a London account without knowing who the owner was. Later, the bank discovered that the company might be owned by a mobster on the FBI’s 10 most wanted list.
Evidence was found that one of Russia’s President’s closest associates, Vladimir Putin, used the Barclays Bank in London to avoid sanctions that were intended to prevent him from using financial services in the West. Part of the cash was used to buy works of art.
He Bank Central of the United Arab Emirates did not act on warnings about a local company that was helping Iran evade sanctions.
Deutsche Bank moved dirty money from money launderers to organized crime, terrorists and drug traffickers.
Standard Chartered moved cash for Arab Bank for more than a decade after customer accounts at the Jordanian bank were used to finance terrorist activities.

What is different about this leak?

There have been numerous large financial information leaks in recent years, including:

Paradise papers (2017): a document leak from overseas legal service provider Appleby and corporate service provider Estera. The two operated together under the Appleby name until Estera became independent in 2016. The documents revealed the offshore financial operations of politicians, celebrities and business leaders.
Panama Papers (2016): Leaked documents from the Mossack Fonseca law firm that gave more details about how wealthy people were taking advantage of offshore tax regimes.
Swiss Leaks (2015): documents from HSBC’s Swiss private bank that showed how Swiss bank secrecy laws were being used to help customers avoid paying taxes.
LuxLeaks (2014): It contained documents from the accounting firm PricewaterhouseCoopers showing that large companies were using tax deals in Luxembourg to reduce the amount of taxes they had to pay.

The FinCEN FilesHowever, they are different because they are not just documents from one or two companies, but come from several banks.

They highlight a number of potentially suspicious activities involving companies and individuals and also raise questions on why the banks that reported such activities did not always act on those concerns.

For now, last week FinCEN announced proposals to improve its anti-money laundering programs.

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