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The FinCEN Files: How Criminals Moved Trillions of Money Through JP Morgan, HSBC and More

Banks such as HSBC, JP Morgan, Standard Chartered and more have been implicated in thousands of suspicious transactions across the globe totalling $2 trillion after secret government documents were released to investigative journalists.

The leaked documents showed that $2 trillion (£1.55 trillion) of potentially corrupt transactions had been enabled through the US financial system between 1999 and 2017. The information was leaked to an international group of investigative journalists (the International Consortium of Investigative Journalists). For the past 16 months, 400 journalists in 88 countries have investigated the transactions, with Buzzfeed News breaking the story on Sunday 20 September.

These documents, dubbed The FinCEN files, are made up of suspicious activity reports (SARs) amongst other US documents, and highlight the global financial corruption that has gone unchecked by the government. They show trillions of dollars of “dirty” money passing through major financial institutions, enabling money laundering from Ponzi schemes, terrorists and mobsters. These documents are compiled by the banks and shared with the government but usually kept from the public eye. Banks and other institutions file SARs with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen) when they have reason to believe a client is using their services for potential criminal activity, but are not required to stop doing business with said client despite the concern of where the money has come from.

This exposé has taken the world by storm, as it exposes the empty threats of banking safeguards and how easily criminals are able to exploit them. Even the banks own employees were alleged to be warning the institutions of this problem, as in interviews with the ICIJ and Buzzfeed News confirm, over a dozen former compliance officers at HSBC were said to question the effectiveness of the banks anti-money laundering programmes with their warnings falling on deaf ears.

The laws that are in place to stop this kind of financial crimes do very little. As long as a bank files the SAR notice, it is protected from any criminal prosecution – acting as a “free pass” to move the money and collect on the fees. At no point are banks required to stop taking money from criminals, and even in the rare cases that banks have been prosecuted or fined for financial misconduct, some continued to carry out suspected criminal money laundering – including HSBC, Standard Chartered and JPMorgan Chase. From the investigation its also possible to see a pattern in which several of the banks process multiple transactions for the same risky clients, despite having previously filed the report.

Unsurprised at the news, Ivan Zhiznevskiy, CEO at 3S Money said “To file a Suspicious Activity Report is easier than run proper KYC on a client. Banks file SARs and let the regulator deal with the problem. If there’s no response – does not matter, it is not their business anymore, carry on. And in 99% of the cases there’s no response. This is because 478,437 SARs were filled in the UK last year alone. And there’s just 80 officers processing this. Quite a significant amount of SARs were filled as a precaution. Serious crimes simply get unnoticed.”

The documents are the latest in a series of financial corruption scandals made known to the public over the last decade, one of which was HSBC’s deferred prosecution agreement in 2012.

The repercussions of this leak can already be seen across the globe, with shares in the banking sector falling just one day after the report was released, where in London Barclays fell by 4% and HSBC lost 3%. In Hong Kong, HSBC dropped over 4%, the lowest their shares have been since May 1995.

Ilia Kolochenko, Founder & CEO of web security company ImmuniWeb said, “This sensational and unprecedented leak clearly demonstrates a wide spectrum of data protection weaknesses in the governmental sector, affecting even the most developed Western countries. In light of the diversity and long timeline of the leaked documents, we may hypothesize that the documents were likely stolen by an insider, or in a silent breach of FinCEN or one of its suppliers.

“From a cybersecurity standpoint, we may expect a growing lack of trust to governmental agencies, which on one side have quasi unlimited access to the most sensitive data of the largest organizations, while cannot duly safeguard this data on the other side. A transparent investigation is required to restore confidence. We might likewise foresee a further hardening of data protection laws that could dramatically exacerbate the situation if implemented too rapidly or overbroadly.”

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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