How banks collude with criminals

Oct 01, 2020 Editorial

Last week, the troubling news items came in quick succession. First, Reuters on September 21st revealed, “FinCen documents reportedly show banks moved illicit funds – Buzzfeed ICIJ.” And, second, from the BBC’s online edition of September 21st, there was this caption, “FinCen files – All you need to know about document leaks.” Both news services provided insights into the ways of money laundering criminals utilizing major international banks to undermine the global financial system.
For purposes of edification, FinCen means the Financial Crimes Enforcement Network and is part of the U.S. Department of the Treasury, while the ICIJ is the International Consortium of Investigative Journalists. From the BBC’s coverage of events, the information is “about $2tn of transactions” allowed to enter, slosh around, and contaminate the global financial network. Two trillion dollars (and we are talking in US dollars here) represent a lot of dirty cash attempted to be cleaned and actually sanitized with the help, or purposeful, knowledge of big banks.
It is not a surprise that this is still going on, for criminals to find ways to influence people and get things done. It must be remembered that even the most robust regulatory and watchdog systems require human interactions to oversee day to day, to clear the way, to grant exceptions, to make the work and business move in tandem with objectives and expectations. The criminally minded have their illegal objectives, which includes probing and gaming the barriers at reputable financial institutions to gain a foothold. They are then made to dance to the tunes that criminals call, so that dirty cash can be inserted into the system and go through the whole sanitizing process with legitimate appearing cash being the result.
Almost in lockstep, bank overseers and line managers are saddled with the expectations of shareholders and the objectives of boards and upper level executives to deliver profits and better returns on a continuing basis. One significant source of such profits and returns is the hundreds of billions netted from criminal activity and which are now introduced into the business of financial institutions.
Said another way, the big criminals – drug barons, major arms smugglers, purveyors of corrupt activities, and terrorist financiers – all have in their possession big money looking for the big outlets that can accommodate easily and seamlessly the amounts of cash that they have ready for deposit. In banks, career advancement, monetary regards, and continuing income statement prosperity result. Everybody wins: shareholders are happy to reap the benefits, delivering executives stand tall among their peers, contributing employees are recognized, and the criminals pull another fast one and get away with lawbreaking, through the aiding and abetting that comes from willing hands and minds on the inside of huge private sector institutions worldwide.
According to the BBC report, there are 2500 documents that detail disturbing developments over a 17-year period and, as a reminder, involving “about 2tn dollars.” Incidentally, that enormous amount covers “only a tiny proportion of the SARs submitted over the period.” At the heart of this mess is the way that the banks operate. They cover their tracks by filing what are called SARs (Suspicious Activity Reports) with regulatory agencies, but then sit back and do nothing else. They continue to do business with the same people suspected and reported. As the BBC’s article pointed out, “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.”
Among the banks identified as sitting on their hands are HSBC, JP Morgan Chase, and Deutsche Bank, among others. Russian oligarchs, one English Premier League club owner, and a close associate of Vladimir Putin have all been fingered as participants in dirty money activity and cover-ups.
One expert in the Reuters report articulated that what happened “poses grave threats to society as a whole.” Big criminal enterprises flourish unhindered, legitimate businesses are stifled, clean governance is undermined, and rampant corruption lives on. This is an acute problem for Guyana, where the EU elections report highlighted the un-sourced money that financed our recent elections. Since favours are owed, successful politicians usually must deliver, which undermines larger society.

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How banks collude with criminals

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