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Global banks reported $2 trillion in suspicious transactions over two decades, new report shows

Deutsche_Bank_ (Tony Webster /WikiCommons)
September 29, 2020

This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.

Global banks moved over a nearly two-decade period more than $2 trillion in payments they believed were suspicious, according to a new investigative report that raises questions about whether financial institutions and governments are doing enough to stop illicit money flows.

The report, published September 20 by the International Consortium of Investigative Journalists, is based on thousands of leaked documents from the U.S. Treasury Department’s arm that investigates money laundering.

The documents show how major Western banks, including JPMorgan and Deutsche Bank, helped criminal networks around the world, including from the former Soviet Union, move and hide money.

It is at least the fifth major leak over the past six years exposing the depth of global corruption.

The 2,100 documents from the Financial Crimes Enforcement Network (FinCEN) were leaked to BuzzFeed and later shared them with more than 400 reporters around the globe for further investigation.

The FinCEN documents consist of Suspicious Activity Reports (SARS) dating from 1999 to 2017. Banks file SARS with FinCEN when they have concerns about the legality of a transaction.

In half of the FinCEN reports received by BuzzFeed, the banks didn’t have information about one or more entities behind the transactions, according to the ICIJ, raising concerns about lax enforcement by financial institutions.

The U.S. and Western governments have passed legislation in recent years that puts more pressure on banks to clamp down on illicit flows or face hefty fines.

Banks globally filed more than 2 million SARS last year. FinCEN, which has 333 employees, is understaffed and underfunded for the fight against corruption, analysts say.

The FinCEN documents published by the ICIJ on September 20 show that a company co-owned by Turkish gold smuggler Reza Zarrab made $1.25 billion in suspicious wire transactions involving Russian and offshore entities.

The documents also show that $11 billion in suspicious transactions flowed to and from Russia over the two-decade period, while $470 million flowed to and from Ukraine.

The news organizations working on the FinCEN documents plan to publish more stories in the coming days about who else was behind the suspicious financial flows.

The FinCEN dump is the latest breach of secretive global financial records since the 2017 leak of documents from Appleby and Estera, two offshore legal and corporate service providers.

Known as the Paradise Papers, they revealed the offshore financial dealings of politicians, celebrities and business leaders.