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Major banks named in US Treasury leaks ‘scandal’

Major global banks have been accused of moving large sums of illicit money for many years, in spite of warnings about the sources of the cash, according to investigative journalists, who have cited confidential documents submitted to the US Treasury.

The latest expose by the International Consortium of Investigative Journalists (ICIJ) and media partners around the world is based on leaked Suspicious Activity Reports (SARs) that banks and financial firms file with the US Department of Treasury’s Financial Enforcement Network (known as FinCen).

The FinCen Files allege that five global banks – JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon – “kept profiting from powerful and dangerous players even after US authorities fined these financial institutions for earlier failures to stem flows of dirty money”.

The banks moved large sums of allegedly illicit funds over a period of nearly two decades despite red flags about the origins of the money, BuzzFeed and other media reported on Sunday, Reuters said.

More than 2,100 Suspicious Activity Reports were obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) and other media organisations.

In all, the ICIJ reported that the files contained information about more than $2 trillion worth of transactions between 1999 and 2017, which were flagged by internal compliance departments of financial institutions as suspicious.

The SARs are in themselves not necessarily proof of wrongdoing, and the ICIJ noted that the leaked documents were a tiny fraction of the reports filed with FinCEN. They provide key intelligence in global efforts to stop money laundering and other crimes.

Banking system ‘under-resourced and overwhelmed’

Media reports on Sunday painted a picture of a system that is both under-resourced and overwhelmed, allowing vast amounts of illicit funds to move through the banking system.

A bank has a maximum of 60 days to file SARs after the date of initial detection of a reportable transaction, according to the Treasury Department’s Office of the Comptroller of the Currency.

But the ICIJ report said in some cases the banks failed to report suspect transactions until years after they processed them.

The SARs also showed that banks often moved funds for companies registered in offshore havens, such as the British Virgin Islands, and did not know the ultimate owner of the account, the report said.

Staff at major banks often used Google searches to learn who was behind large transactions, it said.

Among the types of transactions highlighted by the report: funds processed by JPMorgan for potentially corrupt individuals and companies in Venezuela, Ukraine and Malaysia; money from a Ponzi scheme moving through HSBC; and money linked to a Ukrainian billionaire processed by Deutsche Bank.

“I hope these findings spur urgent action from policymakers to enact needed reforms,” said Tim Adams, chief executive of the trade group Institute of International Finance, in a statement. “As noted in today’s reports, the impacts of financial crime are felt beyond just the financial sector – it poses grave threats to society as a whole.”

HSBC and Deutsche Bank: ‘The info is old’

In a statement to Reuters, HSBC said “all of the information provided by the ICIJ is historical.” The bank said as of 2012, “HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions.”

Standard Chartered said in a statement to Reuters: “We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes.”

BNY Mellon told Reuters it could not comment on specific SARs. “We fully comply with all applicable laws and regulations, and assist authorities in the important work they do,” the bank said.

JPMorgan said it has “thousands of people and hundreds of millions of dollars dedicated to this important work.” “We have played a leadership role in anti-money laundering reform,” the bank said in a statement.

In a statement on Sunday, Deutsche Bank said the ICIJ had “reported on a number of historic issues.” “We have devoted significant resources to strengthening our controls and we are very focused on meeting our responsibilities and obligations,” the bank said.

FinCen said in a statement on its website on September 1 that it was aware that various media outlets intended to publish a series of articles based on unlawfully disclosed SARs, as well as other documents, and said that the “unauthorised disclosure of SARs is a crime that can impact the national security of the United States.”

Representatives for the US Treasury declined comment beyond the FinCen statement.

(Reporting by Megan Davies and Paritosh Bansal for Reuters; Additional reporting by Huw Jones; Editing by Steve Orlofsky and Daniel Wallis)

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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