Several global banks moved large sums of allegedly illicit funds over two decades, despite red flags about the origin of the money, media reports said on Sunday, citing confidential documents submitted by banks to the US government.
The media reports were based on leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury's Financial Crimes Enforcement Network (FinCen).
What are the FinCEN files?
These are leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury's Financial Crimes Enforcement Network (FinCen).
SARs, which the reports said numbered more than 2,100, 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. SARs are in themselves not necessarily proof of wrongdoing, and the ICIJ reported the leaked documents were a tiny fraction of the reports filed with FinCEN.
What has been exposed?
ICIJ reported that five global banks appeared most often in the documents — HSBC Holdings Plc, JPMorgan Chase & Co, Deutsche Bank AG, Standard Chartered Plc and Bank of New York Mellon Corp. SARs provide key intelligence in global efforts to stop money laundering and other crimes. Media reports 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 the initial detection of a reportable transaction, according to the Treasury Department's Office of the Comptroller of the Currency. The ICIJ report said in some cases the banks failed to report suspect transactions until years after they had processed them.
The SARs also showed that banks often moved funds for companies that were registered in offshore havens, such as British Virgin Islands, and did not know the ultimate owner of the account, according to the report. 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.
The India angle
Indian Express, along with 109 media organizations in 88 countries teamed with the International Consortium of Investigative Journalists (ICIJ) and BuzzFeed News and traced the Indian entities and banks named in these SARs filed with FinCEN between 1999 and 2017.
Suspicious bank transactions of Indians are red-flagged to the top US regulator --Treasury Department’s Financial Crimes Enforcement Network (FinCEN) --for suspected money laundering, terrorism, drug dealing or financial fraud, Indian Express reported on Monday.
One of the key findings of the report here is that in many cases the very fact that individuals and companies are being probed by Indian agencies is part of the SAR flagged to FinCEN.
The investigation also revealed transactions of a range of individuals and companies that includes a jailed art and antique smuggler, a global diamond firm owned by Indian-born citizens named in several offshore leaks, a premier healthcare and hospitality group, a bankrupt steel firm, a luxury car dealer who allegedly duped several high net worth individuals, a multinational Indian conglomerate, a sponsor of the Indian Premier League (IPL) team, an alleged hawala dealer who became the reason for a massive fight within the Enforcement Directorate (ED) and a key financier of an Indian underworld don, among others.
In a majority of cases, domestic branches of Indian banks have been utilized to receive or remit the funds. In some cases, bank accounts with foreign branches of Indian banks, too, have been used to carry out these transactions, Indian Express said.
(With inputs from Reuters)