FinCEN Leak Exposes $2tn of Money Laundering Activity

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Global financial institutions have largely failed over recent years to prevent mass money laundering linked to Russian oligarchs, mobsters and Conservative Party donors, according to a new trove of leaked documents.

Over 2000 suspicious activity reports (SARs) filed with the US government’s Financial Crimes Enforcement Network (FinCEN) between 2000 and 2017 were leaked to various publications, in an apparent whistleblowing effort designed to highlight the scale of criminal activity in this area.

SARs are filed by banks and others when illegal activity such as money laundering is suspected. Although this doesn’t require the lender to stop doing business with their clients, banks need to know who their account holders are and to stop any activity that may break international money laundering laws.

However, the sheer scale of the sums involved seem to highlight a major problem area for global financial institutions: the SARs from this leak relate to around $2 trillion in transactions, but are just a small portion of the total reports filed during the 17-year period.

In fact, part of the challenge for the industry is that the scale of the money laundering challenge is still little understood. Accurate statistics are hard to come by, although the UN estimates it could be worth as much as 5% of global GDP ($7 trillion). In the EU, only an estimated 1% of illegal proceeds are seized by authorities.

Among the shady dealings uncovered in the FinCEN leak are evidence that an ally of Russian President Vladimir Putin had ties to a major Conservative Party donor, while other oligarchs avoided Western sanctions by buying art works in London, according to the BBC. Former Trump campaign manager, Paul Manafort, is also named in a SAR.

HSBC, Barclays Bank, JP Morgan, Standard Chartered and Deutsche Bank were all named as helping to move dirty money around the world.

The UK has been named a “higher risk jurisdiction” by FinCEN because of the large number of firms based in the country (3000+) that are named in the leaks.

The leak itself appears to have come from FinCEN given the SARs were originally issued by multiple different lenders. As such, the incident can be filed along with other major whistleblowing discoveries such as the Panama Papers and the Paradise Papers.

FinCEN reacted angrily to the incident, claiming to have referred it to the Department of Justice and the Treasury’s Office of Inspector General.

“As FinCEN has stated previously, the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports,” it said in a brief statement.



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