WHITE COLLAR MONEY LAUNDERING
Big Banks are at the front & center of money laundering of over $2 trillion
International Consortium of Investigative Journalists (ICIJ) has exposed a multi-trillion dollar money laundering scandal
On the face of it, big-name financial institutions (or banks) are supposed to be custodians of your hard-earned money and the first line of defense against illicit activities. While the report of big banks being involved in misdemeanor, illegal activities & money laundering is nothing new, new revelations shed further light on how these mega financial institutions abet corrupt politicians, fraudsters, drug traffickers and terrorist organizations in moving money despite clear red flags.
Roughly two years, three of the “reputed” banks — Deutsche Bank (Germany), Danske Bank (Denmark) & Goldman Sachs (United States) were found to involved in malpractices, covering a 5 year period from 2013–18. Ironically though, billions of dollars of fines handed out by the regulators to these banks have not helped to stop these audacious white-collar crimes, let alone slow them down.
As if this was not enough, the most recent treasure trove of suspicious activity reports (SARs), recovered by BuzzFeed News was shared with the reporters all over the world via the International Consortium of Investigative Journalists (ICIJ). The leaked documents highlight about $2 trillion worth of illegal transactions, laid out in more than 2,000 SARs, filed with the US government’s Financial Crimes Enforcement Network (FinCEN).
“By utterly failing to prevent large-scale corrupt transactions, financial institutions have abandoned their roles as front-line defenses against money laundering.”
~ Paul Pelletier, a former senior U.S. DoJ official
ICIJ is the same organization that published the infamous Panama Papers in 2016. This leak revealed the identity of world leaders, public officials, politicians and hundreds of celebrities, business people, and other wealthy individuals, all of whom used offshore banking accounts to hide their wealth from the authorities.
According to the ICIJ, which organized a team of more than 400 journalists from 110 news organizations in 88 countries to investigate the world of banks and money laundering, the so-called FinCEN Files highlighted more than $2 trillion worth of illicit transactions conducted during two decades between 1999–2017. The involvement of “reputed” names in the banking industry was disturbing at so many levels.
SARs are confidential documents created by employees at the financial institutions to alert the FinCEN about any dubious transactions that they come across. FinCEN, after reviewing these transactions then shares them with law enforcement authorities to take further action. The reports indicate how banks have fallen short to report suspicious transactions on multiple transactions.
The figure above ranks the top 10 banks according to the amount they moved in suspicious transactions as outlined in the FinCEN files. Of the top 10 banks reported, Deutsche Bank alone accounted for more than $1.3 trillion worth of transactions followed by American banking giant JPMorgan recording in excess of $514 billion in suspicious transactions.
Besides the inability of these banks to stop dubious transactions, it also took them much longer than the stipulated time of 30–60 days to alert the authorities of these transactions. The report suggested a median time period of 166 days to report the intilization of the suspicious activity. British banking giant Barlclays performed the worst with a median time of 1,205 days to file a report followed by JPMorgan which took 526 days & Standard Chartered which took 426.
It was not just the extreme callousness on the part of the financial instituion to follow the Anti-money laundering guidelines, but the fact that banks usually filed suspicious activity reports only after a transaction or customer became the subject of a negative news article or a government inquiry. And by that time the money was long gone.
Various accounts of criminal activity and corrupt elements bypassing the AML regulations via these banks have been detailed in the report. Imagine the severity of the situation that an institution like Deutsche Bank, which has been fined in excess of $18 billion since 2008 and lost more than 90% of its stock value since the peak reached in 2007 continues to be the favorite for money launderers. One this is for sure: Big penalties don’t stop banks from moving dirty cash since it’s profitable.
While people are sent behind bars for petty crimes, these white collar dacoits remain scot free.
