About the FinCEN Files investigation
All you need to know about the documents leak
A huge trove of secret government documents reveals for the first time how the giants of Western banking move trillions of dollars in suspicious transactions, enriching themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and drug kingpins.
And the US government, despite its vast powers, fails to stop it.
Today, the FinCEN Files — thousands of “suspicious activity reports” and other US government documents — offer an unprecedented view of global financial corruption, the banks enabling it, and the government agencies that watch as it flourishes. BuzzFeed News has shared these reports with the International Consortium of Investigative Journalists and more than 100 news organizations in 88 countries.
These documents, compiled by banks, shared with the government, but kept from public view, expose the hollowness of banking safeguards, and the ease with which criminals have exploited them. Profits from deadly drug wars, fortunes embezzled from developing countries, and hard-earned savings stolen in a Ponzi scheme were all allowed to flow into and out of these financial institutions, despite warnings from the banks’ own employees.
Leaked documents involving about $2tn of transactions have revealed how some of the world’s biggest banks have allowed criminals to move dirty money around the world.
They also show how Russian oligarchs have used banks to avoid sanctions that were supposed to stop them getting their money into the West.
It’s the latest in a string of leaks over the past five years that have exposed secret deals, money laundering and financial crime.
What are the FinCEN files?
The FinCEN files are more than 2,500 documents, 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 are some of the international banking system’s most closely guarded secrets.
Banks use them to report suspicious behaviour but they are not proof of wrongdoing or crime.
They were leaked to Buzzfeed News and shared with a group that brings together investigative journalists from around the world, which distributed them to 108 news organisations in 88 countries, including the BBC’s Panorama programme.
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.
Two acronyms you need to know
FinCEN is the US Financial Crimes Investigation Network. These are the people at the US Treasury who combat financial crime. Concerns about transactions made in US dollars need to be sent to FinCEN, even if they took place outside the US.
Suspicious activity reports, or SARs, are an example of how those concerns are recorded. 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.
Key findings of ICIJ’s FinCEN Files investigation include:
- Global banks moved more than $2 trillion between 1999 and 2017 in payments they believed were suspicious, and flagged bank clients in more than 170 countries who were identified as being involved in potentially illicit transactions. The figures include $514 billion at JPMorgan Chase and $1.3 trillion at Deutsche Bank.
- The FinCEN Files show that five global banks — JPMorgan Chase, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon — moved illicit cash for shadowy characters and criminal networks even after U.S. authorities fined these financial institutions for earlier failures to stem flows of dirty money.
- In half of the FinCEN Files reports, banks didn’t have information about one or more entities behind the transactions.
- JPMorgan moved money for companies tied to the massive looting of public funds in Venezuela, Malaysia and Ukraine, including under-the-table payments from disgraced Ukrainian officials to Paul J. Manafort Jr., U.S. President Donald Trump’s convicted former campaign manager.
- Deutsche Bank ignored red flags for years and played an integral role in the historic $230 billion money laundering scandal now engulfing Danske Bank’s Estonian operation. The German giant’s automated systems flagged one anonymous U.K.-registered shell company — later revealed as a major laundering vehicle — a dozen times but the bank still processed $2.6 billion and didn’t file a SAR for years until a separate scandal brought the shell company to light.
- Danske Estonia bankers implicated in the scandal ran a secret side company to help set up U.K. shell companies on a wholesale basis for anonymous clients.
- Shadowy entities with ties to the Baltics, known as formation agencies, use a loophole in U.K. corporate law to mass produce anonymous U.K.-registered shell companies and help them set up accounts in corrupt Baltic banks. Nine agencies alone set up 2,447 companies found in the FinCEN Files.
- HSBC continued to transmit money for alleged money launderers and an international Ponzi scheme even while it was serving a five-year probation with U.S. courts.
- In 2014, a U.S. task force recommended that the Treasury Department designate Dubai-based gold conglomerate Kaloti Jewellery Group as a money laundering threat under the USA Patriot Act — but the government didn’t act.
- Banks reported more than $4.8 billion between 2009 and 2017 in suspicious transactions with links to Venezuela. Nearly 70% of that amount had a Venezuelan government entity, such as the Ministry of Finance or the state oil company, as a party.
HSBC moved Ponzi scheme millions despite warning
HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.
Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.
Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.
HSBC says it has always met its legal duties on reporting such activity.
The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.
Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.
Feeding off the tragedy of people dying all over the world.
The document’s leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.
Money laundering is a crime that makes other crimes possible. It can accelerate economic inequality, drain public funds, undermine democracy, and destabilize nations — and the banks play a key role. “Some of these people in those crisp white shirts in their sharp suits are feeding off the tragedy of people dying all over the world,” said Martin Woods, a former suspicious transactions investigator for Wachovia. “Some of these people in those crisp white shirts in their sharp suits are feeding off the tragedy of people dying all over the world.”
Laws that were meant to stop financial crime have instead allowed it to flourish. So long as a bank files a notice that it may be facilitating criminal activity, it all but immunizes itself and its executives from criminal prosecution. The suspicious activity alert effectively gives them a free pass to keep moving the money and collecting the fees.
These global giants have moved masses of dirty money tied to mobsters, fraudsters and corrupt regimes – sometimes it's for people they can’t identify.— ICIJ (@ICIJorg) September 20, 2020
And – you can explore some of the transactions we found here. https://t.co/2CQ4rOOopz pic.twitter.com/sKWbZD8oGG
What has been revealed?
- HSBC allowed fraudsters to move millions of dollars of stolen money around the world, even after it learned from US investigators the scheme was a scam.
- JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it. The bank later discovered the company might be owned by a mobster on the FBI’s 10 Most Wanted list.
- Evidence that one of Russian President Vladimir Putin’s closest associates used Barclays Bank in London to avoid sanctions which were meant to stop him using financial services in the West. Some of the cash was used to buy works of art.
- The UK is called a “higher risk jurisdiction” like Cyprus, according to the intelligence Division of FinCEN. That’s because of the number of UK registered companies that appear in the SARs. Over 3,000 UK companies are named in the FinCEN files – more than any other country.
- The United Arab Emirates’ central bank failed to act on warnings about a local firm which was helping Iran evade sanctions.
- Deutsche Bank moved money launderers’ dirty money for organised crime, terrorists and drug traffickers.
- Standard Chartered moved cash for Arab Bank for more than a decade after clients’ accounts at the Jordanian bank had been used in funding terrorism.
- Standard Chartered moved money on behalf of Al Zarooni Exchange, a Dubai-based business that was later accused of laundering cash on behalf of the Taliban. During the years that Al Zarooni was a Standard Chartered customer, Taliban militants staged violent attacks that killed civilians and soldiers.
- HSBC’s Hong Kong branch allowed WCM777, a Ponzi scheme, to move more than $15 million even as the business was being barred from operating in three states. Authorities say the scam stole at least $80 million from investors, mainly Latino and Asian immigrants, and the company’s owner used the looted funds to buy two golf courses, a 7,000-square-foot mansion, a 39.8-carat diamond, and mining rights in Sierra Leone.
- Bank of America, Citibank, JPMorgan Chase, American Express, and others collectively processed millions of dollars in transactions for the family of Viktor Khrapunov, the former mayor of Kazakhstan’s most populous city, even after Interpol issued a Red Notice for his arrest. Khrapunov, who had already fled to Switzerland and who claims the allegations are politically motivated, was later convicted in absentia on charges that included bribe-taking and defrauding the city through the sale of public property.
The banks mentioned in this story said they could not comment on specific transactions due to bank secrecy laws. Their statements can be found here.
By law, banks must file suspicious activity reports when they spot transactions that bear the hallmarks of money laundering or other financial misconduct, such as large, round-number transactions or payments between companies with no discernible business relationship. SARs are not by themselves evidence of a crime, but FinCEN’s director, Kenneth Blanco, has called them “vital for law enforcement investigations.”Prior to this reporting, very few SARs had ever been revealed. The FinCEN Files encompass more than 2,100.
Information from millions of these documents feeds into a single database, through which law enforcement officers can summon detailed financial information with a few keystrokes. The FinCEN Files opens a rare window into this vast system of financial intelligence, unmatched in the world but all but unknown to the public. The SARs themselves are so closely held that members of the public cannot obtain them through records requests or subpoenas, and banks are not allowed even to confirm their existence.
Prior to this reporting, very few SARs had ever been revealed. The FinCEN Files encompass more than 2,100.
For more than a year, BuzzFeed News and its partner news organizations across the world mined the information on these tens of thousands of pages to map more than 200,000 transactions. (Here’s an explanation of how we did it.) In all, suspicious activity reports in the FinCEN Files flagged more than $2 trillion in transactions between 1999 and 2017. Western banks could have blocked almost any of them, but in most cases they kept the money moving and kept collecting their fees.
Suspicious activity reports are written by the banks’ financial crime watchdogs, or compliance officers, who are often parked in remote offices and left to make sense of a vast number of transactions with very few resources, writing SARs with little research or verification. BuzzFeed News’ research went much further, including reams of internal bank data, thousands of pages of public records, hundreds of interviews with sources across the globe, dozens of Freedom of Information Act filings, five public records lawsuits, and requests for three federal courts to unseal records — all to piece together the intricacies of a financial system that is largely hidden.
Emilia Díaz–Struck and Agustin Armendariz of ICIJ contributed reporting.
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The ICIJ Team
Director: Gerard Ryle
Project manager & editor: Fergus Shiel
Senior editors: Dean Starkman, Mike Hudson, Ben Hallman
Reporters: Simon Bowers, Sasha Chavkin, Will Fitzgibbon, Kyra Gurney, Spencer Woodman, Tanya Kozyreva, Mike Sallah, Scilla Alecci
Data editor: Emilia Díaz-Struck
Data reporters: Agustin Armendariz, Karrie Kehoe, Delphine Reuter, Mago Torres, Margot Willams, Miriam Pensack, Jelena Cosic, Miguel Fiandor
Associate editor and fact checker: Richard H.P. Sia
Additional fact checking: Spencer Woodman, Margot Williams
Online editor: Hamish Boland-Rudder
Community engagement editor: Amy Wilson-Chapman
Copy editor: Joe Hillhouse
Additional editing: Tom Stites
Video reporter: Scilla Alecci
Web developer: Antonio Cucho Gamboa
Chief technology officer: Pierre Romera
Technology team: Ash Guevara, Soline Ledesert, Miguel Fiandor, Bruno Thomas, Anne L’Hote, Madeleine O’Leary, Maxime Vanza
Training manager: Jelena Cosic
Illustrators: Ben King, Alicia Tatone of BuzzFeed News
Confidential Clients designer: Lexi Namer
Digital producer: Asraa Mustufa
Editorial intern: Carmen Molina Acosta