Some of the world’s largest financial institutions want to ban bitcoin to protect society from money laundering and criminal activity, but maybe what they really want is to protect their own monopoly on regulatory and customer abuse.
Nordea Bank bans bitcoin, gets caught in money laundering scandal
In January, Nordea Bank, the largest financial institution in the Nordic region, banned its some 31,000 employees from buying or selling bitcoin or altcoins, due to the perceived criminal and speculative nature of cryptocurrencies.
The stance was met with resistance by some trade unions, such as Finansforbundet and Djøf, who said they were ready to pursue legal action if an employee was reprimanded for ignoring the ban. Additionally, Finance Federation chairman Kent Peterson had called the ban an ‘overreaction,’ stating that cryptocurrencies were, in fact, legal despite not trading on traditional stock exchanges.
Afroditi Kellberg, a spokeswoman for the bank explained, “It is widespread practice across the banking industry to restrict the personal account dealing of staff to prevent them taking positions in speculative investments, or which might expose them to a risk of financial loss and therefore impact their financial standing. Nordea therefore, like all banks, has the right to set out policies in this area that apply to its staff.”
Despite the stance on cryptocurrencies as criminal instruments and risky investments, however, it was recently revealed that individuals holding Nordea accounts received over $171 million from shell companies supposedly involved in illicit operations.
In the coming weeks, officials from Sweden and Finland will cooperate in a full investigation into Nordea Bank.
But Nordea isn’t the only bank taking a hypocritical stance on bitcoin and other cryptocurrencies.
Danske and the biggest money laundering scheme ever
Danske Bank is another notoriously anti-bitcoin bank.
Back in March, the bank released an open letter on its website, urging its customers to avoid cryptocurrencies due to their potential for criminal activity.
The letter read:
“The lack of transparency and regulatory control have made cryptocurrencies a target for criminal purposes and we know that they on several occasions have been involved in criminal transactions like money laundering or extortion.
As a financial institution, we have an obligation to assist in the fight against financial crime and money laundering. At the current stage, cryptocurrencies do not offer the sufficient level of transparency in order for us to live up to our obligations within anti money laundering regulation.”
Despite its “obligation to assist in the fight against financial crime,” however, it was revealed in September that Danske was involved in laundering approximately $235 billion through just one of its branches in Estonia over the course of eight years.
The scandal involved over 32 currencies, companies from the British Virgin Islands, Cyprus, and the Seychelles and was traced back to customers in Azerbaijan, Russia and Ukraine. And with that scale, it’s obvious that Danske wasn’t working alone.
In fact, because many of the transactions involved U.S. dollars, the scheme needed help from banks with access to the Federal Reserve’s Fedwire electronic settlement system. In other words, some of the biggest banks on the planet.
According to the Wall Street Journal, J.P. Morgan, Bank of America, Deutsche Bank and Citigroup’s Moscow branch had all sent or received funds tied to the scandal.
Though it’s unclear how much responsibility these financial giants have in this situation, most have had their own run-ins with illicit activity.
Jamie Dimon and J.P. Morgan
Last year, Jamie Dimon, CEO of J.P. Morgan, made headlines again and again for his comments on cryptocurrencies. For months, it seemed like he just couldn’t stay away from the subject, calling those who bought bitcoin “stupid.” In one interview, Dimon even threatened to fire any employees involved in buying or selling cryptocurrencies.
One of Dimon’s main points in his arguments against bitcoin was the potential for criminal activity. Dimon explained, “Governments like to know where the money is, who has it, and what you’re doing with it… Governments like to control their currency,” adding, “There is a use case for bitcoin. If you live in Venezuela, North Korea … if you’re a criminal. Great product.”
Unsurprisingly after slamming bitcoin, however, J.P. Morgan was reprimanded and fined $2 billion after skirting anti-money laundering rules.
Swiss Financial Market Supervisory Authority Finma announced in December that J.P. Morgan’s Swiss subsidiary “seriously breached” global anti-money laundering rules in its dealings with a Malaysian investment fund which was under investigation. Finma noted:
“The bank questioned neither the economic purpose of the transactions, the procedure involved, nor the substantial amount that remained in the personal account.”
The worst part, however, is that this incident was only one in a string of abuses from the banking giant.
Since 2000, J.P. Morgan has paid over $29 billion in fines for offenses including toxic securities abuses, banking violations, anti-money laundering deficiencies, and market manipulation.
Big Finance is quick to dismiss bitcoin and other cryptocurrencies for their potential use in criminal activities, but the real problem is apparently the banks themselves.
While J.P. Morgan has paid $29 billion in fines, it’s not even leading the pack. Bank of America has almost doubled that number, and the top 10 banks in the world combined have paid out over $174 billion in fines alone for breaking rules and abusing their customers — more than bitcoin’s entire market cap.
Bitcoin was created in the wake of the 2008 financial crisis, and it appears not much has changed since then. Banks are still abusing their power without any real recourse — and at the same time, they’re trying to upend the one thing that might actually be able to help. Coincidence? You be the judge.
Picture from Wikimedia Commons.