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‘Feeding off tragedy’: Leaked FinCEN files reveal $2.7 trillion global bank rort

Anastasia Santoreneos
·3-min read
Evidence envelope with US dollar bills
FinCEN files reveal $2.7 trillion global bank rort. Source: Getty

Major banks across the globe have reportedly been knowingly facilitating criminal activity, in some cases even allowing fraudsters to launder millions of dollars through their systems, leaked bank documents reveal.

BuzzFeed News obtained the records, and shared them with the International Consortium of Investigative Journalists (ICIJ), the team also responsible for the major 2016 investigation that uncovered the Panama Papers.

A 16-month investigation into the secret government documents from the Financial Crimes Enforcement Network in the US, dubbed the FinCEN files, revealed major global banks profited from drug kingpins and terrorists, and that the safeguards intended to stop these criminals from exploiting banks actually allowed them to succeed.

This investigation found banks like JPMorgan Chase, HSBC, Deutsche Bank, Bank of New York Mellon and more profited from dirty money transactions.

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

Manafort is currently serving a prison sentence after he was convicted of tax fraud, bank fraud and failing to declare a foreign bank account in 2019.

How does this happen?

Banks are required to file a notice, called a “suspicious activity report” (SAR), if they think it might be facilitating criminal activity.

The FinCEN files comprise of 2,657 documents, of which 2,100 are SARs. The SARs aren’t evidence of criminal conduct or wrongdoing - they are simply notices that reflect the concerns of bank watchdogs.

FinCEN is the agency within the US Treasury Department which is tasked with stopping money laundering and financial crimes. It collects these SARs, and makes them available to other law enforcement agencies, but the buck essentially stops there, the investigation found.

The government rarely penalises banks for their involvement in financial crime, and when it does, it will offer deferred prosecution agreements and affordable fines. Even after some banks were prosecuted or fined though, the FinCEN files found the major banks continued to move dirty money.

All in all, the leaked SARs identified around US$2 trillion (AU$2.7 trillion) worth of suspicious transactions between 2000 and 2017.

One of the UK’s biggest banks, HSBC, allegedly allowed Ponzi schemers to transfer US$80 million around the world, even after it learned of the scam.

The files reveal the scam actually started after the bank was fined US$1.9 billion in the US over money laundering, and promised to stop these practices.

The banks continue to move the money because it’s profitable, the ICIJ said. The investigation revealed JPMorgan received around US$500 million in fees by serving as the chief banker to Bernie Madoff, a convicted fraudster serving a 150-year prison term for offences related to a Ponzi scheme.

But tax crime is not victimless. Former suspicious transactions investigator for Wachovia, Martin Woods, told BuzzFeed: “Some of these people in those crisp white shirts in their sharp suits are feeding off the tragedy of people dying all over the world.”

The embattled banks have since responded to the investigation.

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