- The FinCEN Files are thousands of leaked documents showing systematic failings of banks and regulators to stop financial crime.
- London is heavily implicated in the documents, with large amounts of illicit funds flowing through the capital.
- The leaks also show how the crypto industry has its fair share of financial crime concerns.
Leaked documents detail how over $2 trillion worth of dirty money has been funnelled through the world’s biggest banks, as published by Buzzfeed. Over 2,500 documents, including over 2,000 suspicious activity reports (SARs), document how authorities were provided with evidence and failed to act.
The FinCEN Files are unprecedented. In 2016, the Panama Papers documented how the world’s wealthiest avoided tax with the help of law firm Mossack Fonseca. A year later, the Paradise Papers revealed further offshore dealings to the benefit of politicians and other public figures. What makes the FinCEN Files different is that they reveal systematic evidence of global corruption, rather than the wrongdoings of a handful of actors.
“Fuck banks, enter Bitcoin,” tweeted Pavol Rusnak, co-founder and CTO of Satoshi Labs, creators of hardware wallet Trezor, on the news.
So the banks launder all this money and when asked about it the hide behind the same bank secrecy act that they use to force KYC AML on everyday people. @MartyBent https://t.co/4DtvxngIXY
— Tobias Nightingale (@Tnightprime) September 20, 2020
Hailey Lennon, legal consultant and Forbes contributor for crypto content, added, “Sorry, tell me about how bad Bitcoin is again.”
The FinCEN Files document how mass global corruption and money laundering runs right under the noses of regulators and law enforcement authorities.
They show that London-based HSBC allegedly allowed the transfer of millions of stolen funds around the world. According to the FinCEN Files, these transactions occurred after evidence of illegal activity was found by US authorities.
In the Middle East, London-based Standard Chartered was allegedly found to have been moving funds for Arab Bank in Jordan, more than ten years after clients of the Jordanian entity were found to be funding terrorism.
And German bank Deutsche Bank was reportedly shown to be moving dirty money connected to terrorism and drug dealing. This SAR documents the series of transactions that flowed through the bank.
London—a hub for crime and corruption
The FinCEN Files have implicated financial centres around the world. Among them, London features prominently as an international capital for financial crime and corruption.
One of the FinCEN Files’ biggest findings is that JP Morgan allegedly facilitated the movement of over $1 billion through a London company. At the time of the transactions, the bank allegedly had no idea who was behind the money. Later, it was discovered the funds might belong to Semion Mogilevich, a Russia mobster found on the FBI’s Ten Most Wanted list.
One of Vladimir Putin’s closest associates, Arkady Rotenberg, was caught under US and EU sanctions levelled at Russia in 2014 following the violent and illegal annexation of Ukraine. Rotenberg was meant to be exiled from using financial services in the West, but according to the FinCEN Files, he has been buying expensive works of art using Barclays bank in London.
It’s not just London’s big banks that have been caught up in the findings. The FinCEN Files also show how Kremlin insider, Lubov Chernukhin, has funded the UK’s governing Conservative Party to the tune of £1.7 million ($2.1 million).
But the findings aren’t limited to the traditional finance world.
How the FinCEN Files relate to crypto
The leaked documents show how the crypto industry—itself plagued with scams, hacks and Ponzi Schemes—is connected to traditional financial crime.
Mayzus Financial Services, an online payment processing company that allegedly served clients involved in the infamous BTC-e money laundering ring, is mentioned in 36 SARs contained in the FinCEN Files. According to Trustnodes, these 36 SARs make Mayzus Financial Services the most frequently cited entity across the entire mass document leak.
Following the arrest of the alleged owner of BTC-e, Alexander Vinnek, Mayzus Financial Services stated they may have had among their clients “legal entities who could be operators of the BTC-e exchange, or private persons who could be owners or employees of the BTC-e exchange.” Its statement also said information about these individuals was “forwarded to the law-enforcement agencies of Great Britain.”
The concern raised by the FinCEN Files is that little action has been taken when SARs are filed.
In addition, Bank of New York Mellon, one of America’s oldest banks, was shown to have reportedly wired over a hundred million dollars linked to alleged crypto ponzi scheme OneCoin. Worth $137 million combined, the transactions were flagged with American authorities, after they were suspected to have been used as a means to hide the true source of the illicit funds.
Banks and regulators spend a lot of energy figuring out how to manage reputational risk. Perhaps taking suspicious activity reports seriously would be a good start.