FinCEN Files: All you need to know about the documents leak
Leaked documents involving about $2tn of transactions have revealed how some of the world's biggest banks have allowed criminals to move dirty money around the world.
They also show how Russian oligarchs have used banks to
avoid sanctions that were supposed to stop them getting their money into the
West.
It's the latest in a string of leaks over the past five
years that have exposed secret deals, money laundering and financial crime.
What are the FinCEN files?
The FinCEN files are more than 2,500 documents, most of
which were files that banks sent to the US authorities between 2000 and 2017.
They raise concerns about what their clients might be doing.
These documents are some of the international banking
system's most closely guarded secrets.
Banks use them to report suspicious behaviour but they are
not proof of wrongdoing or crime.
They were leaked to Buzzfeed News and shared with a group
that brings together investigative journalists from around the world, which
distributed them to 108 news organisations in 88 countries, including the BBC's
Panorama programme.
Hundreds of journalists have been sifting through the dense,
technical documentation, uncovering some of the activities that banks would
prefer the public not to know about.
Two acronyms you need to know
FinCEN is the US Financial Crimes Enforcement Network. These
are the people at the US Treasury who combat financial crime. Concerns about
transactions made in US dollars need to be sent to FinCEN, even if they took
place outside the US.
Suspicious activity reports, or SARs, are an example of how
those concerns are recorded. A bank must fill in one of these reports if it is
worried one of its clients might be up to no good. The report is sent to the
authorities.
Why does this matter?
If you are planning to profit from a criminal enterprise,
one of the most important things to have in place is a way of laundering the
money.
Laundering money is the process of taking dirty money - the
proceeds of crimes such as drug dealing or corruption - and getting it into an
account at a respected bank where it will not be linked with the crime.
The same process is needed if you are a Russian oligarch
whom Western countries have taken sanctions against to stop you getting your
money into the West.
Banks are supposed to make sure they don't help clients to
launder money or move it around in ways that break the rules.
By law, they have to know who their clients are - it's not
enough to file SARs and keep taking dirty money from clients while expecting
the authorities to deal with the problem. If they have evidence of criminal
activity they should stop moving the cash.
Fergus Shiel from the International Consortium of
Investigative Journalists (ICIJ) said the leaked files were an "insight
into what banks know about the vast flows of dirty money across the
globe".
He said the documents also highlighted the extraordinarily
large amounts of money involved. The documents in the FinCEN files cover about
$2tn of transactions and they are only a tiny proportion of the SARs submitted
over the period.
What has been revealed?
HSBC allowed fraudsters to move millions of dollars of
stolen money around the world, even after it learned from US investigators the
scheme was a scam.
JP Morgan allowed a company to move more than $1bn through a
London account without knowing who owned it. The bank later discovered the
company might be owned by a mobster on the FBI's 10 Most Wanted list.
Evidence that one of Russian President Vladimir Putin's
closest associates used Barclays bank in London to avoid sanctions which were
meant to stop him using financial services in the West. Some of the cash was
used to buy works of art.
The husband of a woman who has donated £1.7m to the UK's
governing Conservative Party's was secretly funded by a Russian oligarch with
close ties to President Putin.
The UK is called a "higher risk jurisdiction" and
compared to Cyprus, by the intelligence division of FinCEN. That's because of
the number of UK registered companies that appear in the SARs. Over 3,000 UK
companies are named in the FinCEN files - more than any other country.
The United Arab Emirates' central bank failed to act on
warnings about a local firm which was helping Iran evade sanctions.
Deutsche Bank moved money launderers' dirty money for
organised crime, terrorists and drug traffickers. More details (BuzzFeed News)
Standard Chartered moved cash for Arab Bank for more than a
decade after clients' accounts at the Jordanian bank had been used in funding
terrorism.
Why is this leak different?
There have been a number of big leaks of financial
information in recent years, including:
2017 Paradise Papers - A huge batch of leaked documents from
an offshore legal service provider Appleby and corporate services provider
Estera. The two operated together under the Appleby name until Estera became
independent in 2016. They revealed the offshore financial dealings of
politicians, celebrities and business leaders
2016 Panama Papers - Leaked documents from the law firm
Mossack Fonseca showed more about how wealthy people were using offshore tax
regimes to their benefit
2015 Swiss Leaks - Documents from HSBC's Swiss private bank
showed how it was using the country's banking secrecy laws to help clients
avoid paying tax
2014 LuxLeaks contained documents from the accountancy firm
PricewaterhouseCoopers showing that big companies were using tax deals in
Luxembourg to reduce the amount they were having to pay
The FinCEN papers are different because they are not just
documents from one or two companies - they come from a number of banks.
They highlight a range of potentially suspicious activity
involving companies and individuals and also raise questions about why the
banks which had noticed this activity did not always act on their concerns.
FinCEN said the leak could impact on US national security,
compromise investigations, and threaten the safety of institutions and
individuals who file the reports.
But last week it announced proposals to overhaul its
anti-money laundering programmes.
The UK has also unveiled plans to reform its register of
company information to clamp down on fraud and money laundering.
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