BY LILY BARTIN AND EMILY RIVERA SEPT. 24, 2020
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