Here's Why The FinCEN Files Matter

BY LILY BARTIN AND EMILY RIVERA   SEPT. 24, 2020
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For years, the Western banking industry, aided by the government, turned a blind eye to the transactions of terrorists, drug cartels and Ponzi schemes.

What should I know?

  • On Sept. 20, BuzzFeed News leaked thousands of U.S. government documents, dubbed “the FinCEN Files,” to the International Consortium of Investigative Journalists.1
  • The FinCEN Files, as reported on by BuzzFeed News, reveal decades of widespread corruption and “suspicious activity” in the Western banking industry.
    • The suspicious activity includes transactions with organizations linked to the Taliban, drug cartels and Ponzi schemes.2
    • The file, containing more than 2100 suspicious activity reports, was requested by Congress in the investigation of Russian interference in the 2016 presidential election.3
  • Banks are required by law to file reports denoting suspicious transactions, called suspicious activity reports (SARs). The FinCEN Files reveal that, in most cases, Western banks filed SARs—but then turned a blind eye to insidious transactions in order to continue quietly profit off of them.
  • Banks compiled these documents and shared them with the government; however, until now, they have been hidden from the public.
    • The leaked documents include thousands of “suspicious activity reports” detailing illegal activities that have gone unchecked by the US government.4

What does this mean?

  • In short, FinCEN reports reveal an alarming pattern, from both business and government sectors, of neglecting criminal activity when there is profit to be made.
  • Global banks filed suspicious activity reports on transactions totalling over $2 trillion between 1999 and 2017.5
    • Documents leaked to the ICIJ show that these suspicious transactions were reported years after being cleared by banks.6
  • The 2100 SARs revealed comprise only 0.02% of the total reports submitted. This means that the $2 trillion in dirty money exposed is only a small percentage of the possible criminal transactions.7
  • Documents reveal governmental neglect in cases of money laundering. In 2014, for instance, a massive Dubai-based gold conglomerate was flagged as a money laundering operation. When this was brought to the U.S. Treasury, the department declined to act.8
  • In the instances when the U.S. government penalizes banks, they often rely on deferred prosecution agreements, in which there are fines but no high-level arrests.9
    • Under the direction of former deputy attorney general Rod Rosenstein, the Trump administration has made it even more difficult to hold executives accountable.10
  • In 2019, FinCEN received more than 2 million SARs,11 yet Buzzfeed News reported that sources at FinCEN say most SARs are never read.12
  • The FinCEN Files investigation revealed that major financial institutions often fail to perform basic checks on their customers.13
  • Lawmakers are calling for a bipartisan bill, the Anti-Money Laundering Act (AMLA) of 2020, to be added to the National Defense Authorization.14

In a Quote:

“By utterly failing to prevent large-scale corrupt transactions, financial institutions have abandoned their roles as front-line defenses against money laundering,” Paul Pelletier, a former senior U.S. Justice Department official and financial crimes prosecutor, told ICIJ.15

International Consortium of Investigative Journalists: Global banks defy U.S. crackdowns by serving oligarchs by serving oligarchs, criminals and terrorists


References:

  1. https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks?scrlybrkr=7fe44d60
  2. Ibid.
  3. https://www.icij.org/investigations/fincen-files/wired-to-make-money-barclays-private-bankers-serve-ultra-rich-as-watchdogs-sound-alarms/
  4. https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks?scrlybrkr=7fe44d60
  5. Ibid.
  6. https://www.msn.com/en-us/money/news/what-fincen-files-leak-is-all-about/ar-BB19fkkE
  7. https://www.forbes.com/sites/pawelkuskowski/2020/09/22/banks-aml-efficiency-the-fincen-files-horror-story-and-what-we-can-learn-for-crypto/#180d45fd2237
  8. https://www.icij.org/investigations/fincen-files/about-the-fincen-files-investigation/
  9. https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks
  10. Ibid.
  11. https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks
  12. https://home.treasury.gov/about/budget-financial-reporting-planning-and-performance/budget-requestannual-performance-plan-and-reports/budget-in-brief
  13. https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks
  14. https://www.acfcs.org/lawmakers-banking-trade-transparency-groups-push-for-sweeping-aml-bill-to-be-included-in-ndaa/
  15. https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs-criminals-and-terrorists/