KEY POINTS

  • FinCEN noted at least 2,100 suspicious activity reports filed by banks and other financial firms
  • ICIJ identified more than $2 trillion in potentially suspicious transactions between 1999 and 2017
  • JPMorgan moved $1 billion alone for a fugitive financier connected to a scandal involving Malaysia’s sovereign wealth fund

Major international banks have allegedly helped criminals, terrorists and oligarchs to move and launder at least $2 trillion, according to a report by the International Consortium of Investigative Journalists, or ICIJ, of Washington D.C.

Leaked documents from the Financial Crimes Enforcement Network, or FinCEN, revealed that global banks including JPMorgan Chase (JPM), HSBC Holdings (HSBC), Standard Chartered Bank, Deutsche Bank (DB), and Bank of New York Mellon (BK), among others, have thwarted efforts by the U.S. government and other authorities to crack down on money laundering by transferring huge amounts of illicit cash for questionable characters and entities.

FinCEN, an intelligence bureau of the U.S. Department of the Treasury, noted at least 2,100 suspicious activity reports filed by banks and other financial firms in its leaked files. Buzzfeed found the documents and shared them with ICIJ.

All told, ICIJ identified more than $2 trillion in potentially suspicious transactions between 1999 and 2017, including $514 billion at JPMorgan and $1.3 trillion at Deutsche Bank. (Transactions flagged by banks as “suspicious” are not always indicative of criminal activity, however).

ICIJ reported that the five aforementioned global banks continued to move immense amounts of cash for dangerous and criminal clients even after the U.S. government and others heavily fined them for previous similar infractions.

For example, ICIJ noted, JPMorgan, the largest bank based in the U.S., transferred funds for people and companies linked to the looting of public funds in Malaysia, Venezuela, and Ukraine.

JPMorgan moved $1 billion alone for a fugitive financier connected to a scandal involving Malaysia’s sovereign wealth fund 1MDB. The megabank also washed money for an energy company accused of cheating the government of Venezuela and helping to cause electrical blackouts in that country.

In addition, ICIJ noted, over the course of more than 10 years JPMorgan processed more than $50 million in payments for Paul Manafort, President Donald Trump’s former campaign manager who was eventually convicted and jailed for fraud. At least $6.9 million was moved by JPMorgan on behalf of Manafort even after he quit the Trump campaign amid various accusations of misconduct.

JPMorgan continued with such unethical transactions after making promises to the government that it would stop such practices, ICIJ said.

HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon also engaged in helping shady characters move cash despite vowing to crack down on such corruption, ICIJ indicated.

In 2012, ICIJ noted, for example HSBC, the biggest bank in Europe, admitted it laundered at least $881 million for Latin American drug cartels, and later paid almost $2 billion in fines to avoid criminal prosecutions. However, over the next five years of its probationary period, HSBC did business with suspected Russian money launderers.

ICIJ found that Bank of New York Mellon facilitated at least $1.3 billion in transactions between 1997 and 2016 for Oleg Deripaska, a Russia billionaire and ally of Russian President Vladimir Putin. Deripaska is allegedly tied to Russian organized crime.

Deutsche Bank also helped Derispaka transfer more than $11 billion in transactions between 2003 and 2017, ICIJ stated.

“[Bank of New York] Mellon takes its role in protecting the integrity of the global financial system seriously, including filing suspicious activity reports,” the bank said in a statement. “As a trusted member of the international banking community, we fully comply with all applicable laws and regulations, and assist authorities in the important work they do.”

In response to the many allegations, Deutsche Bank stated: “The fight against financial crime, money laundering and capital flight has been a priority for investigating authorities and financial institutions alike. The world’s leading financial institutions, including Deutsche Bank, have invested billions of dollars to more effectively support authorities in this effort. Naturally, this leads to increased detection levels.”

The German bank added: “We have devoted significant resources to strengthening our controls and we are very focused on meeting our responsibilities and obligations. This also includes implementing risk mitigants and, where appropriate, off-boarding customers and correspondent banking relationships.”

In 2012, New York regulators accused Standard Chartered of conspiring with Iran for almost a decade to move $250 billion in secret transactions. Still, Standard Chartered continued to conduct business with other questionable entities, including Arab Bank, which was linked to terrorist acts in Israel.

Standard Chartered told the BBC that it “initiated account closure” in connection with Arab Bank. “This process can take time in some cases, but in all cases the bank continues to fulfil its regulatory obligations” Standard Chartered said.

ICIJ added that the transactions uncovered in the FinCEN files represent a minuscule percentage of the amount of dirty money moving through global banks. Indeed, between 2011 and 2017, more than 12 million suspicious activity reports were filed by global financial institutions.

The available records, ICIJ said, show banks “blindly moving cash through their accounts for people they can’t identify, failing to report transactions with all the hallmarks of money laundering until years after the fact, even doing business with clients enmeshed in financial frauds and public corruption scandals.”

ICIJ further said that threats by U.S. authorities have failed to deter the big banks from moving illicit funds – since such transactions generate huge fees for the banks.

“By utterly failing to prevent large-scale corrupt transactions, financial institutions have abandoned their roles as front-line defenses against money laundering,” Paul Pelletier, a former senior U.S. Justice Department official and financial crimes prosecutor, told ICIJ. “[Banks] operate in a system that is largely toothless.”

A spokesperson for the Department of Justice criminal division told ICIJ that it “stands by its work and remains committed to aggressively investigating and prosecuting financial crime, including money laundering, wherever we find it.”

David Lewis, executive secretary of the Paris-based Financial Action Task Force, an anti-money laundering group, told ICIJ: “Everyone [banks and government agencies] is doing badly.”