Komal Joshi · Oct 20, 2020 . 6min read
Leaked FinCEN files show Banks helped launder more than $2 trillion
The FinCEN reports advocate that JP Morgan allowed a company to move $1 billion of someone without conducting the necessary KYC/AML checks.
By Victor Ugochukwu · Sep 22, 2020 . 8min read
The news of how some banks helping criminals launder dirty money is making the rounds in some leaked FinCEN files which the media has gotten possession of. The documents show that banks helped moved as much as $2 trillion worth of transactions between 2000 and 2017.
British Broadcasting Corporation published a hit piece on this story alleging that about 2,500 FinCEN files following a series of leaks that have been happening for the last five years. It says the documents were leaked to the Buzzfeed News and a group of investigative journalists in about 88 countries has been combing through to unearth the highhandedness of some banks.
For contexts, FinCEN stands for Financial Crimes Enforcement Network based in the US. It mandates banks both home and abroad to document and report transactions made in US dollars that has any appearance of shadiness. Banks therefore use the FinCEN files to report suspicious behaviour but they are not proof of wrongdoing or crime.
Top banks in the leaked FinCEN files appeared to have erred knowingly
From the leaked documents, it shows that HSBC allowed fraudsters to launder millions of dollars of stolen money around the world. The interesting part was that it did this even after it learned from US investigators the scheme was a scam. This isn’t even the biggest part of the big banks aiding fraud story. Still in the same report, for instance, JP Morgan allowed a company to move $1 billion of someone without conducting the necessary KYC/AML checks. It ended up that the funds’ owner may have been in FBI’s list of 10 most wanted persons. Also, in the leaks, was that even though the UAE’s central bank had been warned about a local firm which was helping Iran evade sanctions, it continued supporting the firm.
In all, the leaked documents show a flaw in the banking reporting system. First thing was not that the banks didn’t fail to report the money-laundering firms. But after the reporting, one would expect the banks to cease supporting these criminal entities. But that wasn’t the case. They continued and kept earning fees for transactions the money launderers incurred.
Blockchain technology would quickly solve this.
Now, one thing is clear from these leaks. There’s too much secrecy within the banking system. In hindsight, secrecy isn’t bad until the actors like we have seen in these banks willingly flout set rules. Already, most banks will not necessarily begin to use a decentralized cryptocurrency for money transfer, but an open ledger will enshrine transparency. We refer to this open ledger as the Blockchain. For instance, if FinCEN adopts a network mandating banks to upload leaked files and is readily available to authorized parties, some of these shady acts might have been discovered earlier.
The fact that cryptocurrency has had some dark moments in history like Silk Road, Mt. Gox and even ransomware attacks requesting bitcoins does not even come close to banking institutions illicit acts. And of course, these criminals carried out their transactions in USD. This does not in any mean the dollar is evil like many in the mainstream media paint cryptocurrencies. Not to forget that these leaked FinCEN files from banks only show just a period of 7 years without capturing all. We still expect more news to come, which may prove devastating to the banks mentioned in the document. FinCEN had already said that the leak could impact on US national security issues. It also claims it could compromise investigations, and threaten the safety of institutions and individuals who file the reports.
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