NEW DELHI: Several global banks moved large sums of allegedly illicit funds over a period of nearly two decades, despite red flags about the origin of the money, media reported Sunday, citing confidential documents submitted by banks to the United States government.
The media reports were based on leaked Suspicious Activity Reports (SARs) filed by banks and other financial companies with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCen).
The SARs, which reportedly exceeded 2,100, were obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) and other media organizations.
In total, the ICIJ reported that the files contained information on more than $ 2 trillion in proceedings between 1999 and 2017, which were flagged by the internal compliance departments of financial institutions as suspect. SARs themselves are not necessarily proof of wrongdoing, and ICIJ reported that the leaked documents were a small fraction of the reports filed with FinCEN.
Five global banks appeared most frequently in the documents: HSBC Holdings Plc, JPMorgan Chase & Co, Deutsche Bank AG, Standard Chartered Plc and Bank of New York Mellon Corp, the ICIJ reported.
SARs provide key intelligence in global efforts to stop money laundering and other crimes. Sunday’s media reports painted a picture of a system that is 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 initial detection date of a reportable transaction, according to the Treasury Department’s Office of the Comptroller of the Currency. The ICIJ report said that in some cases banks did not report suspicious transactions until years after they had been processed.
The SARs also showed that banks often moved funds for companies that were registered in offshore havens, such as the 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 find out who was behind large transactions, he said.
Among the types of transactions highlighted in the report: funds processed by JPMorgan for potentially corrupt individuals and companies in Venezuela, Ukraine and Malaysia; money from a Ponzi scheme that moves through HSBC; and money linked to a Ukrainian billionaire prosecuted by Deutsche Bank.
“I hope these findings will spur urgent action by policymakers to pass the necessary reforms,” said Tim Adams, chief executive of the Institute of International Finance trade group, in a statement. “As noted in today’s reports, the impacts of financial crime are felt beyond the financial sector – it poses serious threats to society as a whole.”
In a statement to Reuters, HSBC said that “all the information provided by the ICIJ is historical.” The bank said that in 2012, “HSBC embarked on a multi-year journey to review its ability to fight financial crime in 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 programs.”
BNY Mellon told Reuters it could not comment on specific SARs. “We fully comply with all applicable laws and regulations and assist the 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 leading role in anti-money laundering reform,” the bank said in a statement.
In a statement Sunday, Deutsche Bank said the ICIJ had “reported on a number of historical issues.” “We have dedicated 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 the illegally disclosed RAS, as well as other documents, and said the “Unauthorized disclosure of RAS is a crime. It may affect the national security of the United States.”
Representatives of the United States Treasury declined to comment beyond FinCen’s statement.
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