Stanchart, Citibank, Barclays among global banks; HSBC Holdings Plc, Deutsche Bank AG, Commerzbank AG and JPMorgan Chase & Co named in the report by the International Consortium of Investigative Journalists basing on leaked documents obtained by BuzzFeed News in fresh scandal about dirty money involvement as they sought to limit the fallout from a cache of leaked documents showing they transferred more than $2 trillion in suspect funds over nearly two decades.
By law, banks must file suspicious activity reports when they spot transactions that bear the hallmarks of money laundering or other financial misconduct, such as large, round-number transactions or payments between companies with no discernible business relationship.
BuzzFeed News mined the information on these tens of thousands of pages to map more than 200,000 transactions. In all, suspicious activity reports in the FinCEN Files flagged more than $2 trillion in transactions between 1999 and 2017. By the norm’s world banks especially in western world could have easily blocked almost any of them, but in contrary they kept the money moving and kept collecting their fees.
Standard Chartered moved money on behalf of Al Zarooni Exchange, a Dubai-based business that was later accused of laundering cash on behalf of the Taliban. During the years that Al Zarooni was a Standard Chartered customer, Taliban militants staged violent attacks that killed civilians and soldiers.
Citibank alongside world top banks Bank of America, JPMorgan Chase, American Express collectively processed millions of dollars in transactions for the family of Viktor Khrapunov, the former mayor of Kazakhstan’s most populous city despite Interpol issuing a Red Notice for his arrest. Khrapunov, fled to Switzerland terming the allegations politically motivated later convicted in absentia on charges that included bribe-taking and defrauding the city through the sale of public property.
The report was based on 2,100 leaked suspicious activity reports (SARs), covering transactions between 1999 and 2017, filed by banks and other financial firms with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Banks are required to file an SAR whenever handling funds that cause grounds for suspicion of criminal activity.
Last year, Standard Chartered was found to have continued clearing transactions for individuals and businesses in off-limits countries, primarily Iran. The bank paid fines totaling $1.1 billion to US and UK authorities, and extended the terms of the deferred prosecution agreement for the sixth time in the space of seven years. The bank apologized for its “violations and control deficiencies” but promised that none had occurred after 2014.
The FinCEN Files documents show Standard Chartered processed hundreds of millions of dollars for companies it suspected were circumventing sanctions against Iran until at least 2017.
Policymakers, regulators and banks have acknowledged fundamental flaws in the anti-money laundering system. The rules around what is deemed “suspicious” can be vague, which leads some banks to send too many reports and others to send too few. And the enforcement group is understaffed to handle the millions of SARs that need to be analyzed to determine whether a crime has been committed.
The reports drew calls from some industry groups and activists for reforms. Investors worried about the potential fallout for global banks, many of which have faced hefty fines in the past for lapses in controls and spent billions of dollars to bolster compliance.
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