FinCEN Files: Big Banks Moved $2 Trillion in Illicit Funds

Another financial scandal came out in the public domain as the recently leaked FinCEN Files show how multiple big banks were involved in moving around $2 trillion in illicit funds across the globe between 1999 and 2017.

The revelations were made based on the suspicious activity reports (SARs) filed by the banks with the United States’ Financial Crimes Enforcement Network (FinCEN), which were recently leaked to BuzzFeed News and later passed on to other international investigative journalism consortiums, including the International Consortium of Investigative Journalists (ICIJ).

Over 2,500 pages of the leaked documents show the involvement of major global banks, including HSBC, JP Morgan, Deutsche Bank, Standard Chartered, and Bank of New York Mellon.

They were involved in facilitating laundering for funds related to criminal organizations and sanctioned entities with major lapses in Know Your Customer (KYC) Know Your Customer (KYC) Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks Read this Term) and Anti-Money Laundering (AML) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) provisions.

Banks Handling Dirty Money

HSBC processed transfers of millions of dollars around the world linked to a Ponzi scheme, but the worst part is that the bank knew about the whereabouts of the funds. Known as WCM777, the Ponzi scheme defrauded thousands from the poor Asian and Latino communities with an assurance of doubling their investments in 100 days.

Apart from that, Barclays helped billionaire Arkady Rotenberg, a close associate of Russian President Vladimir Putin, to launder money dodging sanctions imposed on him by the United States and the European Union in 2014.

Germany’s Deutsche Bank and Standard Chartered were also involved in laundering dirty money for organized crime, terrorists, and drug traffickers, the leaked reports revealed.

The FinCEN intelligence division labeled the United Kingdom as a 'higher risk jurisdiction' as over 3,000 companies registered in the country were named in the SARs, higher than any other country.

In addition to the banks, the UAE central bank failed to act on the warnings on a local firm, which helped Iran to evade western sanctions.

Now the banks are trying to come out clean as HSBC told Reuters that all the data in the documents are "historical" and the bank has “embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions.”

“[The] extent that information referenced by the ICIJ is derived from SARs, it should be noted that this is information that is pro-actively identified and submitted by banks to governments pursuant to the law,” Deutsche Bank said in a statement.