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The FinCEN files: $2 trillion of dirty money washed through global banks

Over the weekend the FinCEN files story broke, one of the most reputationally damaging stories related to major global banks. Leaked secret government documents reveal how the giants of Western banking move trillions of dollars in suspicious transactions, enriching themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and cartels.

Worse still, it appears that the US government, and others, despite their powers, failed to stop it.

The so called FinCEN Files are thousands of Suspicious Activity Reports (SARs) and other US government documents. They offer an unprecedented view of global financial corruption, the banks enabling it, and the government agencies that watch as it flourishes.

The documents, compiled by banks, shared with the government, but kept from public view, expose banking safeguards, and the ease with which criminals have exploited them. Profits from deadly drug wars, fortunes embezzled from developing countries, and hard-earned savings stolen in a Ponzi scheme were all allowed to flow into and out of these financial institutions, despite warnings from the banks’ own employees.

Money laundering is a crime that makes other crimes possible. It can accelerate economic inequality, drain public funds, undermine democracy, and destabilize nations — and the banks play a key role. Laws that were meant to stop financial crime have instead allowed it to flourish. So long as a bank files a notice that it may be facilitating criminal activity, it all but immunizes itself and its executives from criminal prosecution. The suspicious activity alert effectively gives them a free pass to keep moving the money and collecting the fees.

The Financial Crimes Enforcement Network, or FinCEN, is the agency within the Treasury Department charged with combating money laundering, terrorist financing, and other financial crimes. It collects millions of these suspicious activity reports, known as SARs. It makes them available to US law enforcement agencies and other nations’ financial intelligence operations. It even compiles a report called “Kleptocracy Weekly” that summarises the dealings of foreign leaders such as Russian President Vladimir Putin.

What it does not do is force the banks to shut the money laundering down.

Though FinCEN itself is a US network, it requires notification of concerns about any transaction made in US dollars — even if it took place outside the US.

That means the documents in the FinCEN files cover about $2 trillion of transactions over the 18-year period analysed. Even then, they only represent a fraction of the SARs submitted in that time.

More than 3,000 UK companies are named in the FinCEN Files, more than any other country. It has been named a “higher risk jurisdiction” as a result, alongside countries such as Cyprus.

The banks involved have told reporters they cannot comment on on specific transactions mentioned in the files due to banking security laws, but that they met all the required legal and regulatory duties.

The top 10 banks represented in the FinCEN Files include:

Institution Number of SARs Amount flagged
Deutsche Bank 982 $1.3 trillion
BNY Mellon 325 $64 billion
Standard Chartered 232 $166 billion
JP Morgan 107 $514 billion
Barclays 104 $21 billion
HSBC 73 $4.4 billion
Bank of China 35 $1.3 billion
Bank of America 35 $384 million
Wells Fargo 21 $57 million
Citibank 18 $251 million

The FinCEN Files are different to previous leaks in the past that lifted the lid on corruption, such as the Panama Papers, because the documents come from the banks themselves rather than select companies.

The files expose an underlying truth of the modern era: The networks through which dirty money traverse the world have become vital arteries of the global economy. They enable a shadow financial system so wide-ranging and so unchecked that it has become inextricable from the so-called legitimate economy. Banks with household names have helped to make it so.

The files were leaked and shared with the International Consortium of Investigative Journalists (ICIJ), a group that brings together investigative journalists from around the world, which then distributed them to 108 news organisations in 88 countries. Hundreds of journalists have been sifting through the dense, technical documentation, uncovering some of the activities that banks would prefer the public not to know about.

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