Disclosed American records expose persistent challenges in global anti-mone laundering efforts
Global Investigation Uncovers Vulnerabilities in Combating Money Laundering
Berlin - A comprehensive investigation involving numerous media partners, named "FinCEN Files," has exposed significant issues in the global fight against money laundering, based on thousands of pages of secret suspicious activity reports leaked from the U.S. Department of the Treasury. The revelations point to banks worldwide engaging in business with high-risk and sometimes criminal clients over several years.
The joint investigation, published Sunday, showcases how major financial institutions have allegedly accepted clients with ties to organized crime, fraud, and sanctioned oligarchs, processing multi-billion-dollar transactions for them. Banks reportedly filed such activities reluctantly and with significant delays, with some continuing to do business with questionable clients even after being sanctioned for money laundering offenses.
The U.S. online medium BuzzFeed News shared the documents with the International Consortium of Investigative Journalists (ICIJ), allowing a global inquiry involving over 400 journalists from 110 media outlets in 88 countries. In Germany, NDR, WDR, "Süddeutsche Zeitung," and BuzzFeed News participated in the investigation. The findings reveal how easily money launderers, drug cartels, or corrupt politicians can access international financial markets.
Some of the world's largest banks appear to have bypassed their own anti-money laundering standards, such as when checking new customers, despite being obligated to do so. Banks were also slow in reporting suspicious transactions, with the average delay being nearly six months, and in some cases, years. This allowed transactions to continue, creating opportunities for money laundering activities.
In response to an inquiry made by ICIJ on behalf of all participating media outlets, the U.S. Department of the Treasury stated that they typically do not comment on suspicious activity reports. The agency highlighted that publishing these reports could potentially jeopardize ongoing investigations and, therefore, the media partners will not publish the data in its entirety to protect their sources.
According to experts, the FinCEN Files underscore systemic flaws in money laundering prevention. One of the loopholes exploited by criminals is the correspondent banking system, where money launderers frequently use small banks, especially those in the Baltics, for their transactions. The data shows that more than 2,100 money laundering suspicious activity reports from 2000 to 2017, consisting of approximately $2 trillion in transactions, were involved in the investigation.
The investigation also highlighted the challenges in sectors like real estate, which often involve shell companies and trusts, making it easier for money laundering to occur. Recently, new rules have been implemented to increase transparency, such as the FinCEN Residential Real Estate Rule requiring reporting on non-financed transfers.
Despite robust regulatory frameworks, the FinCEN Files suggest that major banks sometimes continue conducting business with high-risk or criminal clients by leveraging the SARs system to meet reporting requirements, while not always proactively ending business relationships or freezing transactions upon detection of suspicious activity. This exposes ongoing gaps in global anti-money laundering efforts. Enhanced transparency, stricter enforcement, and targeted reforms are necessary steps to address these vulnerabilities.
- The FinCEN Files, a joint investigation involving over 400 journalists from various media outlets, revealed that large banks in the banking-and-insurance industry, including those from general-news countries, have allegedly engaged in business with clients who have ties to crime, fraud, and sanctioned oligarchs, highlighting the vulnerabilities in the fight against money laundering.
- The investigation also pointed out that the correspondent banking system, a part of the other industry, is often exploited by money launderers, as they frequently use small banks, especially those in the Baltics, for their transactions, underscoring systemic flaws in money laundering prevention.
- The FinCEN Files further exposed that sectors like real estate, which are known for their use of shell companies and trusts, provide opportunities for money laundering, emphasizing the need for enhanced transparency, stricter enforcement, and targeted reforms to address the vulnerabilities in global anti-money laundering efforts.
