The documents containing suspicious activity reports (SARs) which filed by banks and other financial institutions with the United States (US) Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) were leaked to media on Sunday (20 Sept), revealing how some of the biggest banks in the world facilitated the movement of “dirty money” from country to country.
The SARs, known as the FinCEN files, contained information about transactions that worth more than US$2 trillion (S$2.7 trillion) dated between 1999 and 2017 which were flagged by internal compliance departments of financial institutions as suspicious.
FinCEN is a bureau of the US Department of the Treasury that collects and analyses information on financial transactions to combat money laundering, terrorist financing, and other financial crimes.
The files were said to have more than 2,100 suspicious activity reports, which are not necessarily proof of wrongdoing. BuzzFeed News obtained the SARs and shared with the International Consortium of Investigate Journalists (ICIJ) and other media organisations.
ICIJ highlighted that the US$2 trillion in suspicious transactions filed in the documents “is just a drop in a far larger flood of dirty money gushing through banks around the world”.
“The FinCEN Files represent less than 0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017.”
According to the report, five global banks that appeared most in the documents were HSBC, JPMorgan, Deutsche Bank, Standard Chartered and Bank of New York Mellon.
Other banks include United Overseas Bank (UOB), CIMB Bank, and DBS Bank.
The SARs also revealed that JPMorgan, which based in the US, moved money for individuals and companies tied to “massive looting of public funds” in Malaysia, Venezuela and Ukraine, said ICIJ.
“The bank moved more than $1 billion for the fugitive financier behind Malaysia’s 1MDB scandal, the records show, and more than $2 million for a young energy mogul’s company that has been accused of cheating Venezuela’s government and helping cause electrical blackouts that crippled large parts of the country.”
ICIJ also reported that banks in the FinCEN files often processed transactions to companies registered “in so-called secrecy jurisdictions” without knowing the ultimate owner of the account.
“At least 20% of the reports contained a client with an address in one of the world’s top offshore financial havens, the British Virgin Islands, while many others provided addresses in the UK, the US, Cyprus, Hong Kong, the United Arab Emirates, Russia and Switzerland,” it said.
HSBC declined to comment on suspicious activity reporting, saying that ICIJ’s information is “historic and predates” the end of its five-year deferred prosecution deal.
“Since 2012, HSBC has embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions,” it said in a statement to CNBC.
While Standard Chartered noted that it takes responsibility to fight financial crime “extremely seriously” and have invested substantially in its compliance programmes.
HSBC shares in Hong Kong dropped by 4.4 per cent to HK$29.60 this morning, while Standard Chartered tumbled 3.8 per cent to HK$35.80.