South African bank accounts linked in ‘dirty money’ report

 ·21 Sep 2020

Global banks moved large sums of allegedly illicit funds for nearly two decades, despite red flags about the origins of the money, BuzzFeed and other media reported on Sunday, citing confidential documents submitted by banks, to the US government.

The media reports are based on leaked suspicious activity reports filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen), Reuters reported.

The reports, which number more than 2,100, were obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) and other media firms.

The consortium reported that the files contained information about more than $2 trillion worth of transactions between 1999 and 2017, and were flagged by internal compliance departments of financial institutions as suspicious.

Reuters said that the reports are not necessarily proof of wrongdoing, and the ICIJ reported documents were a tiny fraction of the reports filed with FinCEN.

Five global banks appeared most often in the documents – HSBC Holdings Plc, JPMorgan Chase & Co, Deutsche Bank AG, Standard Chartered Plc and Bank of New York Mellon Corp.

JPMorgan, the largest bank based in the United States, moved money for people and companies tied to the massive looting of public funds in Malaysia, Venezuela and Ukraine, the leaked documents reveal.

Other crimes linked to the money include:

  • In 2012, London-based HSBC, the largest bank in Europe, signed a deferred prosecution deal and admitted it had laundered at least $881 million for Latin American drug cartels;
  • A bombing in Jerusalem;
  • Money linked to an underworld figure named Semion Mogilevich – described as the “Boss of Bosses” of Russia mafia groups.

Data published on the ICJ’s website shows that a number of South African transactions were flagged as part of the report.

In a sample of 173 transactions extracted from the FinCEN files, the ICJ’s data shows how suspicious transfers flowed to and from South Africa with around $482,758 (R7,861,183) received and $60,270,011 (R981,430,832) sent.

“US agencies responsible for enforcing money-laundering laws rarely prosecute megabanks that break the law, and the actions authorities do take barely ripple the flood of plundered money that washes through the international financial system,” the ICJ said.

“In some cases, the banks kept moving illicit funds even after US officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes.”

Inside big banks, systems for sniffing out illicit cash flows rely on overworked, under-resourced staffers, who typically work in back offices far from headquarters and have little clout within their organisations.

Documents in the FinCEN Files show compliance workers at major banks often resort to basic Google searches to try to learn who’s behind transfers involving hundreds of millions of dollars.

As a result, the secret documents show, banks frequently file suspicious activity reports only after a transaction or customer becomes the subject of a negative news article or a government inquiry — usually after the money is long gone.

Read: Push for Postbank to become South Africa’s first state-owned bank

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