By Kelechi Deca

More evidence has emerged on how some of the world’s biggest banks helped criminals and shadow figures laundered huge sums of money around the world. The documents leaked from the FinCen files show that about $2tn of transactions were illegally transacted through some of the world’s biggest financial institutions for customers some of whom are people with questionable means. The FinCEN Files  are leaked documents from the Financial Crimes Enforcement Network (FinCEN) that have been investigated by International Consortium of Investigative Journalists (ICIJ). 

The reports describe over 200,000 suspicious financial transactions valued at over US$2 trillion that occurred from 1999 to 2017 across multiple global financial institutions. The documents appear to show that while the United States Government had received this financial intelligence they did little to stop activities such as money laundering. A report by the BBC describes the importance of the files as showing how the “world’s biggest banks have allowed criminals to move dirty money around the world”.

The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury is saddled with the task of analysing information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes.

The FinCEN files revealed how top tier banks such as HSBC, JP Morgan, Barclays Bank, Deutsche Bank, Standard Chartered amongst others helped highly connected individuals move money round several accounts in the world. JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it.

According to reports 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, raising concerns on most of the transactions they carried out on behalf of their customers without following laid down rules because they understood the kinds of transactions involved. The documents are utilised by the banks to report suspicious behaviour.

FinCEN collates suspicious activity reports (SARs), reports required to be filed by financial institutions when they suspect their clients are engaging in financial crime. The files contained about 2,657 leaked documents, including 2,121 SARs, in 2019 and shared them with the ICIJ made up of 400 journalists from 88 countries who proceeded to investigate the leaks which were brought to public attention on September 20, 2020.

 The ICIJ has stated that the files are mostly from 2011-2017. Further they noted that the findings may not be representative of all SARs, as the files received are less than 0.02% of the more than 12 million SARs that financial institutions filed with FinCEN during this time. Some of the records were gathered as part of US congressional investigations into Russian interference in the 2016 United States elections; others were gathered following requests to FinCEN from law enforcement agencies.

Deutsche Bank, and Bank of New York Mellon have involved in money laundering. They also criticise the United States government for not forcing the banks to stop this activity. ICIJ equally  reported that American ExpressBank of AmericaBank of ChinaBarclaysChina Investment CorporationCitibankCommerzbankDanske BankFirst Republic BankSociété GénéraleVEB.RF and Wells Fargo are being involved in the SARs. The ICIJ noted 62% of the leaked filings involved Deutsche Bank, with at least 20% involving addresses in the British Virgin Islands.

Prominent individuals highlighted within the leaks include former Donald Trump campaign manager Paul Manafort, Iranian-Turkish gold trader Reza Zarrab, fugitive businessman Jho Low, and alleged Russian organised crime boss Semion Mogilevich. 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 invested in works of art, the report added.

Other reporting on national connections to the FinCEN Files includes Canada’s CBC reporting on HSBC and Australian Broadcasting’s coverage.

ICIJ and Deutsche Welle (DW) report that Germany’s Deutsche Bank accounted for 62% of the leaked SARs. DW further notes that Deutsche Bank was responsible for $1.3 trillion worth of suspicious transactions, even after hundreds of millions in fines for violating US sanctions. They also reported that the files revealed Deutsche Bank was a major source for money laundering for organised crime, terrorists and drug traffickers. The Indian Express reported that Jindal Steel and Power was flagged by Deutsche Bank for money laundering.

The SARs, with additional investigations by the Organized Crime and Corruption Reporting Project, also provide further details on the scheme employed by Reza Zarrab to evade economic sanctions on Iran, and its links with the Magnitsky tax fraud and other Russian money laundering schemes.

In Ireland, The Irish Times reported of a Dublin business, “an international company services operation”, whose very successful Riga, Latvia office helped clients from Russia and the former Soviet Union establish secret accounts with Estonian and Latvian banks, with UK LLP shell companies formed back in the 1990s. The FinCEN documents show 646 of 2100 Scottish and English company SARs are linked to this Irish company, the largest number of any such entity. As for his relationship to money laundering, the company founder likens himself to the innocent seller of a criminal get away car.

The files also revealed a consulting firm for the Tokyo Olympic bid committee paid $370,000 to the son of one-time IOC member Lamine Diack. Diack was jailed for corruption earlier in 2020. The FinCEN Files implicated former Mexican president Enrique Peña Nieto in money laundering. It also revealed that Group Grand Limited was controlled by Alex Saab and Alvaro Pulido.

The files revealed that US banks have notified their authorities of around $160 million that has gone through the partly state-owned DNB group. The transactions via DNB took place mainly from 2015 to 2017. Some transfers date back to 2008. The Gazeta Wyborcza reported that in 2013 and 2014, the HSBC facilitated the transfer of $80 million from investors to the World Capital Market fund, a pyramid scheme that the bank was aware of at the time. The Central Bank of the UAE failed to act on SARs related to evading sanctions in Iran.

A report by the BBC suggests that the FinCen Files reveal that the United Kingdom (UK) bank HSBC was involved in numerous illegal money transfers. At the time, HSBC was subject to a deferred prosecution agreement for the laundering of $881 million on behalf of the Sinaloa and Norte del Valle cartels. The files also describe how Barclays Bank laundered money on behalf of Arkady Rotenberg, a close associate of Vladimir Putin, who is under sanctions for his involvement in the Ukrainian crisis. The BBC further notes that the UK is judged a “higher risk jurisdiction” due to the number of the country’s companies appearing in SARs.

NBC News reported that North Korea carried out a money laundering scheme in the US using shell companies and help from Chinese firms to launder money through US banks.

When BuzzFeed News reached out to the named banks for response to the allegations, American Express and Bank of China did not respond; Bank of America and First Republic Bank declined to comment. Even as the worldwide group of journalists was preparing their reporting of the FinCEN Files, FinCEN announced on September 16, 2020 that they would be overhauling their money laundering programs.  FinCEN condemned the leak, saying that it could impact on US national security, compromise investigations, and threaten the safety of institutions and individuals who file FinCEN reports.

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