Summary of what was found from the 'Finsen document' that revealed the money laundering support of major banks and problems



The existence of the Finsen document reveals that many international financial institutions are aware of the existence of

money laundering but leave it unchecked . The International Consortium of Investigative Journalists (ICIJ) explains what the Finsen document is and what is the problem in this case.

FinCEN Files --ICIJ
https://www.icij.org/investigations/fincen-files/

Global banks defy US crackdowns by serving oligarchs, criminals and terrorists --ICIJ
https://www.icij.org/investigations/fincen-files/global-banks-defy-us-crackdowns-by-serving-oligarchs-criminals-and-terrorists/

◆ What is a Finsen document?
On September 21, 2020, it was reported that major banks such as JP Morgan Chase , HSBC Holdings , Standard Chartered Bank , Deutsche Bank , and Bank of New York Mellon were aware of money laundering but left it unchecked. I did. This situation was revealed by the leak of a suspicious activity report (SAR) submitted by a financial institution to the Financial Crimes Enforcement Network Department (FinCEN) of the US Treasury, so the leaked document is called the 'Finsen document'. It is. The Finsen document also recorded money laundering using Japan Post Bank .

Money laundering is the act of putting money from criminal acts such as controlled drug transactions, fraud, illegal gambling, tax evasion, and counterfeit bills into a bank unrelated to criminal transactions to make it look like money obtained by legitimate means. Say. This is not the first time a bank has been found to be used for money laundering, and in the past five banks, JP Morgan Chase, HSBC Holdings, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon, have been the authorities. Although he was fined by the bank, it was revealed in this Finsen document that he had overlooked the existence of money laundering since then.

The Finsen document was first obtained by foreign media BuzzFeed News , shared by the International Consortium of Investigative Journalists (ICIJ), and analyzed by 110 media outlets and more than 400 journalists from 88 countries.



Analyzing more than 2,500 files contained in Finsen documents, between 1999 and 2017, $ 2 trillion in transactions flagged by financial institutions as potentially money laundering or criminal activity It turns out that it exists (about 210 trillion yen). Of this amount, $ 51.4 billion (about ¥ 5.4 trillion) was from JP Morgan Chase, and $ 1.3 trillion (about ¥ 136 trillion) was from Deutsche Bank. However, the 'suspicious activity' shown in these reports merely indicates the concerns of the observers, and there is no solid evidence.

In addition, the amount of 2 trillion dollars is huge, but ICIJ points out that this amount is a 'drop' of money laundering performed in the world. Only 0.02% of the more than 12 million reports of 'suspicious activity' are included in the Finsen document.

◆ What's wrong with money laundering?
Money laundering provides funding to support criminal gangs and increases inequality in the international economy. Money laundered money is often held in paper companies established in tax

havens, and some elites flee law enforcement and tax authorities and are fraudulent. It is said that it is a method for accumulating funds in tax havens. Not only are tax havens extremely low in tax rates, but they often refuse to provide information to law enforcement agencies in other countries, but banks accused in Finsen documents are kept secret and their owners are unknown. I was also sending money. Twenty percent of the reports contained in the document were about clients with accounts in the British Virgin Islands , known as tax havens.



According to the United Nations Office on Drugs and Crime, $ 2.4 trillion (about 252 trillion yen) of illegal funds is washed every year, which is 2.7% of the products and services produced every year in the world. On the other hand, it has been pointed out that money laundering detected by the authorities is only 1% of the polluted money generated in the world.

What did you learn from the Finsen document?
The content contained in Finsen documents is usually strictly protected and kept secret by international financial institutions. The leak revealed that the bank had blindly moved cash from its account for an unidentified anonymous person and had not reported to authorities for years even if there were signs of money laundering. Did. In addition, ICIJ's 16-month study reveals that large banks play a central role in the transfer of funds related to corruption, fraud, criminal gangs and terrorism.

For example, in 2003, a suicide bombing occurred in Jerusalem, the capital of Israel, killing seven people and injuring 20. It is said that Steven Averbac, a former police weapons leader who was the first to notice the terrorist attack, reduced the damage by trying to stop the terrorist attack, but Averbac later said that the Arab Bank had suicide bombed. He filed a lawsuit for shedding money on the terrorist group that caused the terrorism.

However, Finsen documents show that Standard Chartered Bank, which is even larger than the Arab Bank, may have benefited from the transaction. In 2005, authorities restricted Arab banks' remittances in the United States because they discovered that they had poor money laundering controls. Standard Chartered Bank, based in London, England, has responded by helping Arab Bank clients access the American system.



In 2012, a New York court said, 'Standard Chartered Bank has been working with the Iranian government to secretly send $ 250 billion over nearly a decade and earn hundreds of millions of dollars in fees.' Made the US financial system vulnerable to terrorists, arms dealers, drug organizations, and corruption, 'concludes a $ 670 million fine to Standard Chartered Bank. I imposed. However, according to Finsen documents, between September 2013 and September 2014, Standard Chartered Bank processed a total of 2055 transactions with Arab Bank customers.

In addition, according to Finsen documents, transactions for Arab banks between the time of the ruling and February 2016 amounted to $ 12 million, many in the name of 'donations' and 'charities.' I also know that it was.



◆ Why do banks leave fraudulent transactions unchecked?
The Standard Chartered Bank transaction is just one example included in the Finsen document, and there are a number of similar activities. Despite the suspicion of money laundering by banks, the main reason for sending money is the fee. When it comes to large-scale transactions, the fees can amount to hundreds of millions of dollars.

Also, in the case of a huge bank, it is said that it is the 'compliance person who has no influence on the head office, lacks resources and is overworked' who manages the system and checks for fraudulent cash flow. .. The ICIJ also said, 'Such people often do a basic Google search to find out who is behind the huge amount of money,' he said when the scandal news came out and when the government investigated it. It also states that SAR submissions will increase only when this happens.

In an interview with former HSBC compliance officers, ICIJ and BuzzFeed said more than a dozen people questioned the effectiveness of banks' anti-money laundering programs. Asking the other bank for information about the person behind a big deal often didn't give them enough time to confirm, and HSBC branches outside the United States sometimes ignored the request itself. That's right. In addition, a trial at Standard Chartered Bank in 2019 revealed that employees who claimed that 'illegal transactions were not allowed' were dismissed due to intimidation and harassment, and cooperated with the FBI investigation. There are also cases in which employees who have been harassed have been permanently removed from the path to management.

◆ How to prevent banks from participating in money laundering?



U.S. authorities rarely prosecute banks for money laundering, and even if the court grants the authorities' allegations, some of the huge amount of money the banks earn from money laundering will be fined. The current situation is that it is only.

Financial crime expert John Cassara points out that while the penalties imposed on banks are seemingly large, they are only minor in terms of the overall profits that banks make. And in many cases, it also mentions that fines are paid by stakeholders, not by those who would otherwise be accountable.

For example, BNP Paribas, a French bank, violated the sanctions imposed by the United States on Iran and other countries, and was fined $ 9 billion (about 940 billion yen) for sending money, but shareholders. The focus was on 'can we maintain a license to send dollars in the United States?', So the stock price rose by as much as 4% after the fine was decided. Under these circumstances, the parties will be fined without any damage.

Economist and lawyer James S. Henry acknowledged that the actions of US law enforcement agencies over the last two decades 'have had an impact on banks compared to when they were completely unregulated.' Prosecution will and international cooperation are needed to change the relationship between banks and fraudulent cash flows. ' As a concrete approach, Henry concludes that he needs a way to fine or imprison the senior officer responsible for the problem.

in Note, Posted by darkhorse_log