By Alun John, Sumeet Chatterjee and Lawrence White
HONG KONG / LONDON (Reuters) – Shares of HSBC in Hong Kong and those of Standard Chartered in London fell to their lowest level since at least 1998 on Monday after media reported that they and other banks, including Barclays and Deutsche Bank, moved large sums of supposedly illicit funds. for almost two decades despite the red flags about the origin of the money.
BuzzFeed and other media articles were based on leaked Suspicious Activity Reports (SARs) submitted by banks and other financial firms to the U.S. Department of the Treasury’s Financial Crime Enforcement Network (FinCen).
HSBC London shares fell as much as 5% to 288 pence, their lowest intraday level since 2009, after the lender’s Hong Kong shares hit a 25-year low. The population has been reduced by almost half since the beginning of the year.
StanChart fell as much as 4.6% in London to its lowest level since 1998, in the context of a broader sell-off in the market with the STOXX European bank index down 4.8%.
BuzzFeed News obtained more than 2,100 SARs, which in themselves are not necessarily proof of wrongdoing, and shared them with the International Consortium of Investigative Journalists (ICIJ) and other media organizations.
In a statement to Reuters on Sunday, HSBC said that “all information provided by the ICIJ is historical.” The bank said that beginning in 2012 it had embarked on a “multi-year journey to review its ability to fight financial crime.”
StanChart said in a statement that it took its “responsibility to fight financial crime very seriously and has invested substantially in our compliance programs.”
Barclays said it believes it has complied with “all of its legal and regulatory obligations, including in relation to the US sanctions.”
The largest amount of SARS in the cache related to Deutsche Bank, whose shares fell 5.2% on Monday. 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,” said a bank spokesperson.
HSBC and London-based StanChart, among other global banks, have paid billions of dollars in fines in recent years for violating US sanctions on Iran and anti-money laundering rules.
The files contained information on transactions worth more than $ 2 trillion between 1999 and 2017, which the internal compliance departments of financial institutions identified as suspicious.
The ICIJ reported that the leaked documents were a small fraction of the reports filed with FinCEN. HSBC and StanChart were among the five banks that appeared most frequently in the documents, the ICIJ reported.
“It confirms what we already knew: that a large number of SARs are being filed with a relatively low number of cases brought to trial,” said Etelka Bogardi, Hong Kong-based financial services regulatory partner at the Norton Rose Fulbright law firm.
FIGHT AGAINST FINANCIAL CRIME
SARs 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.
In some cases, banks continued to move illicit funds even after US officials warned them that they could face criminal prosecution if they continued to do business with criminals or corrupt regimes, he said.
In recent years, global banks have driven investments in technology and personnel to address stricter anti-money laundering regulatory requirements and sanctions around the world.
Thousands of clients were kicked out of bank accounts in major centers of wealth, including Hong Kong and Singapore, following a Malaysian money laundering scandal, exposure of the ‘Panama Papers’ and a global push for transparency fiscal.
FinCen said in a statement on its website Sept. 1 that it was aware that various news outlets intended to publish a series of illegally disclosed SAR-based articles, as well as other documents.
(Report by Alun John, Sumeet Chatterjee and Donny Kwok in Hong Kong and Lawrence White in London; Editing by Stephen Coates, Raju Gopalakrishnan and Louise Heavens)
(Business Standard staff may have only modified the title and image of this report; the rest of the content is automatically generated from a syndicated feed.)
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