What is finCEN Files?
FinCEN is the US Financial Crimes Enforcement Network at the US Treasury who combat financial crime. They look into grievances and concerns about transactions made in US dollars that need to be sent to FinCEN, even if they took place outside the US.
The FinCEN files comprise 2,657 documents, including 2,121 suspicious activity reports, 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, known as Suspicious Activity Reports or SARs, are some of the international banking system's most closely guarded secrets. They reflect views by watchdogs within banks, known as compliance officers, reporting past transactions that bore hallmarks of financial crime, or that involved clients with high-risk profiles or past run-ins with the law. 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.
In effect, they are crucial red flags raised by banks that point law-enforcement agencies to further investigation. Banks use them to report suspicious behavior, but they are not proof of wrongdoing or crime. Hence, these are not evidence of illegality.
Almost 80 percent of these SARs involving transactions worth $2 trillion was reported by top global banks such as Deutsche Bank, Bank of New York Mellon (BMYM), Standard Chartered Bank, Citibank, and JP Morgan Chase.
The documents were leaked to Buzzfeed News and shared with a group that brings together investigative journalists from around the world.
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. 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.
FinCEN is a bureau of the United States Department of treasury that collects and analyses information to combat money laundering, terrorism financing, evasion of economic sanctions, and other financial crime. FinCEN collates suspicious activity reports (SARs), reports required to be filed by financial institutions when they suspect their clients are engaging in financial crime. Unauthorized disclosure of a SAR is a US Federal criminal offense, as it could undermine or hamper ongoing investigations, and threaten the safety of financial institutions and those who file the SARs. SARs are not evidence of a crime, but the FinCEN claims they provide vital information to investigate crimes. FinCEN collected more than 2 million SARs last year, but its staff has decreased by 10% from 2009 to 2019.BuzzFeed News sources also include that most SARs are not read or take action upon. While banks are required to file a SAR when they are dealing with suspicious activity, they must still take actions themselves; filing a SAR is not the only thing the bank does to deal with corruption or money laundering.
BuzzFeed News obtained the 2,657 leaked documents, including 2,121 SARs, in 2019, and shared them with the ICIJ. 400 journalists from 88 countries proceeded to investigate the leaks which were brought to the public's attention on 20 September 2020.BuzzFeed News and the ICIJ state that the files flag more than 200,000 transactions dating from 1999 to 2017, worth a total of 2 trillion dollars. Furthermore, they noted that the findings may not be representative of all SARs, as the files received are less than 0.02% of the more than 12 million SARs that financial institutions filed with FinCEN during this time. The Miami Herald said that the files "are the most detailed U.S. Treasury records ever leaked."
BuzzFeed News noted that some of the records were gathered as part of U.S. congressional investigations into Russian interference in the 2016 United States Elections; others were gathered following requests to FinCEN from law enforcement agencies.
BuzzFeed News contacted the named banks for responses to the allegations. American Express and Bank of China did not respond; Bank of America and First Republic Bank declined to comment. Even as the worldwide group of journalists was preparing their reporting of the FinCEN Files, FinCEN announced on 16 September 2020 that they would be overhauling their money laundering programs.
Deutsche Bank commented on the FinCEN investigation, explaining that the transactions in the FinCEN file leaks were before 2016, and "acknowledged past weaknesses in our control environment... we learned from our mistakes, systematically tackled the issues and made changes to our business perimeter, our controls, and our personnel." They invested "$1 billion in improved controls, training and operational processes, and have increased our anti-financial crime team to over 1,500 people." and make the claim that they "are a different bank now." They followed their response up with an additional statement, restating their commitment to ensuring fraud doesn't occur and saying "To the extent that information referenced by the ICIJ is derived from SARs, this is information that is pro-actively identified and submitted by banks to governments under the law. SARs are alerts of potential issues, not proven facts.”
Standard Charter responded to these accusations, claiming "we take our responsibility to fight financial crime extremely seriously." They state that they meet their obligations to law enforcement, and say that "the responsibility of banks is to build effective screening and monitoring systems and we work closely with regulators and law enforcement to bring perpetrators to justice."
FinCEN condemned the leak, saying that it could impact on US national security, compromise investigations, and threaten the safety of institutions and individuals who file FinCEN reports.
Senators Elizabeth Warren and Bernie Sanders both called for reform amidst the news. Senator Warren pushed for punishments when banks are caught breaking the law and called for the passage of her "Ending Too Big to Jail Act" bill. Bernie Sanders stated that the laundering practices were "just some of the routine business practices on Wall Street" and that the "business model of Wall Street is a fraud.
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