Follow The Money: Banking, Criminality And The FinCEN Files

It was all a fitting reminder of Bertolt Brecht’s remark that bank robbery lies in the province of amateurs. The real professionals of plunder establish banks. Last month, the labours of Buzzfeed and the International Consortium of Investigative Journalists revealed just that. Centre stage: international banking misbehaviour. And my, was there much to go on.

The journalists had been combing through leaks comprising 2,121 suspicious activity reports (SARs) filed with the US Financial Crimes Enforcement Network (FinCEN) between 2000 and 2017. The relevant amount in terms of transactions: somewhere in the order of $2 trillion. It was awfully good of the banks themselves to be filing such reports with the US Treasury. But such matters are mere formalities; there is no incentive for the bank in question to stop trading with a shady client, despite what is suspected in the report. The point is to merely keep an account of it.

The criteria for an SAR are not sharply defined. Matthew Collin of the Brookings Institute suggests a few: unclear sources and ill-defined beneficiaries; a nexus with a jurisdiction historically noted for financial crime and irregularity. Another “common sign of suspicion is one in which a client attempts to avoid attention from the authorities by making several deposits below $10,000, which is the automatic reporting threshold.”

The FinCEN Files highlight five stellar performers in the movement of illicit cash: JP Morgan Chase, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon. A few instances are worth mentioning. Despite being fined $1.9 billion in the US for money laundering, HSBC moved money through its US operations to accounts in Hong Kong in 2013 and 2014. Central to this was a Ponzi investment scam known as WCM777.

The brainchild of Chinese national Phil Ming Xu, self-styled “Dr Phil,” the World Capital Market scheme promised returns of 100 percent profit in 100 days. Xu vigorously promoted this version of monetary paradise through social media, webinars and seminars. Gullible investors obliged, seduced by a rather grotesque combination of God and Mammon. (Xu was courting the evangelical market.) $80 million was raised and, for the unsuspecting investors, lost.

In the aftermath of the losses, direct physical harm resulted. Santa Rosa investor Reynaldo Pacheco extolled the virtues of WCM777 to family and friends. One acquaintance Pacheco had recruited to the scheme took umbrage at having lost $3,000. Taking matters rather seriously, she enlisted the services of three men in April 2014. They kidnapped the doomed Pacheco and bludgeoned him to death with rocks, leaving his remains in a creek bed in Napa, California.

Despite such events, and the knowledge that WCM was the subject of investigative interest in three countries, HSBC continued moving money for the investment fund. As the ICIJ describes it, over “$30 million tied to WCM flowed through the bank in 2013 and 2014 – at a time when HSBC was under probation as part of its deferred prosecution deal with America authorities.”

Not to be outdone, JP Morgan is also revealed to be more than the obliging middleman in dirt-caked transactions. An SAR filed by the bank in 2015 reveals that its London office might have assisted moving some of an amount totalling $1.02 billion. JP Morgan had provided services to ABSI Enterprises, a shady offshore company, between 2002 and 2013, despite being unclear of the firm’s provenance and ownership. The filed SAR disclosed how the parent company of ABSI “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”. Such relationships demonstrate that capitalism lacks nationalist allegiances: Mogilevich is, after all, the emperor of Russia’s organised crime network.

Follow the moneyJP Morgan’s reaction to such unmasking was an excuse all the banks have used at some point. “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The amounts involved boggle, but they really ought to boggle more. Minds have been tasked with trying to comprehend the deep sea of money laundering, and they have been left baffled in the drowning. The United Nations Office on Drugs and Crime has an estimate: each year, between 2-5 percent of global GDP, or $800 billion to $2 trillion – is laundered. In all this we see the tarnished, and, in banking circles, the acceptable fruits, of globalisation.

The United Nations Office on Drugs and Crime puts it down to various vectors: the development in financial information, the innovation of technology, the advance of communications. All “allow money to move anywhere in the world with speed and ease. This makes the task of combating money-laundering more urgent than ever.” Using the image of depth, “dirty money” becomes more difficult to identify as it plunges into the system, being rinsed and laundered.

The root of the problem is a deeply conventional one. Money is to be made. Banks make money handling money. Rinsing and washing, they still earn fees for the service. They are also encouraged by their staying power as indispensable international citizens. Politicians of various shades come and go. They occasionally spout demagogic promises about reforming and regulating the banking sector, but these voices will eventually pass.

Mechanisms are also in place that serve as damp slaps on the wrist than genuine incentives for reform. The deferred prosecution agreement (DPA) is a central part of the US government’s approach to induce change within a bank’s transaction practices. The reporting system is also feeble. Banks often filed SARs months after the suspicious transaction, often several with the same client. No action would be taken. A corollary of such filings is the value of such SARs. In the hope of preventing regulatory consequences, banks may issue an avalanche of them for regulators at FinCEN to investigate. Since 2003, the number of SARs from banks has quadrupled. FinCEN’s staffing has not kept the pace 178 in 2001; 300 in 2020.

This is not to say that kid gloves have always been the order of the day. Penalties have resulted. Since 2008, $36 billion worth in financial institution fines have been issued, with the bloc of North America taking about $27.9 billion. But such punishments have done little to chasten the sinners. Like thorny flagellation for the pious, the expectation of such treatment is built into the belief system. The sin is permitted to continue.

This is the institutional understanding that permeates the regulators and the regulated. Little wonder that FinCEN was unimpressed by the leaks. “As FinCen has stated previously,” the body asserted in a statement, “the unauthorized disclosure of SARs is a crime and can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports.”

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    One Comment
    1. samir sardana

      There are 44 Indian Banks in the FINCEN List

      People say Y ? dindooohindoo

      The NPAs of the Indian Banking system,would be Rs 30,00,000 crores (post COVID),and every year the banking and financial frauds,are Rs 150000 crores

      All this stolen money,has to be laundered.Post Demonetisation – there is no safe haven,in real estate,and the Indian state being bankrupt,will soon start seozing idle and surplus lands,and also,demonetising bank deposits,and will also,demonetise the Rs 2000/- currency note.

      Hence,this CASH has to EXIT India,and it will be caught by the US/UK and EU Intel and Treasury cells (in terms of surveil).


      Y is UK the den for stashing and laundering money ? That is like saying Y is London,a International Finance and Banking Centre ?

      Part 1

      Firstly,London has an exceptional legal and judicial system with specialised laws, specialised courts and specialised judges for economic,commercial and financial misdemeanours and crimes.What that means is that tax evasion and bank fraud,is not a crine,under FATF and Brit laws,UNLESS it qualifies as a crime,in British Common Law. dindooohindoo

      Step 1

      Take the pathetic state,of the Indian Legal and Judicial system,and the PANDOO POLICE.The word Pandoo,is a Dog in Khaki,on an invisible leash,held by Politicians (who are pruned by the Tycoons).Unlike Dogs,who listen to sonic whistles – the Pandoos react only, when they SEE or HEAR money.So,if the Pandoo Police mismanages the case,or destroys evidence,there is nothing that the Indian Judiciary can do – especially the lower judiciary (which is inept) – and the Pandoos (CBI/ED …) are all well greased by the Tycoons.

      As per a SC Ex-Judge,the entire Indian Judiciary,is CORRUPT and HE ALSO SAYS THAT,CONVICTS CANNOT GET A FAIR TRIAL IN INDIA ! This Ex-SC Judge is DEFEMDING a man in the Crown Court who is on the Interpol RCN list. 78003748.cms

      So for a tycoon in London,to prove that he was framed,by an inept police and judiciary,and a worthless legal system,is easy money.For the Crown Court,to be convinced of these arguments,is easy,

      Step 2

      The credibility of the Indian Investigators,is the PITS.They reek of corruption and political bias,and witch-hunting.They are all worthless,and have been excoriated and lampooned,in the media and UN reports.For the Crown Court,to be convinced of these arguments,is easy.

      Step 3

      Take the case of Nirav Modi.What is the Diamond Business in India ? It is Pure money laundering.WHy is this Bania being targettted – he says ? Ok – so his company diverted funds,submitted forged Invoices/AWB/Test Reports,They used the Bank SWIFT Codes etc.,BUT THE CATCH IS – Y did the Auditors,Bank Management and the RBI INSPECTIONS,NOT DETECT IT ? Cheating and Fraud,is a part of the Jewellery business,and the GOI was pushing this business, to BRING IN THE USD – and SO,the systen ENCOURAGED THE SAME.

      Then,Mr Modi sayeth,that Y did his OWN AUDITORS not DETECT THE FRAUD ? So the final plea is, I DID NOT KNOW – as all financial matters,are handled by the CFO and the MD.Lastly, he says WHY DID THE RBI NOT DETECT THE FRAUD IN PNB – AS THE RBI DIRECTORS WERE ON THE PNB BOARD – so was RBI also ….)

      So for a tycoon in London,to prove that he was framed,by an inept police and judiciary,and a worthless legal system,is easy money.For the Crown Court,to be convinced of these arguments,is NOT TOO DIFFICULT.

      Step 4

      UK is a signatory to all the Protocols of the UN – ICCPR,ICESCR,CERD,CAT etc.So to PROVE in a Crown Court,that the Indian Pandoo Police are scum,and torture is rampant,and the health and hygiene conditions,in Indian Jails,are pathetic – is easy – as it is documented by UNHRC,ECHR,Amnesty,and the Indian Media.


      NEXT STAGE IS TO BRING IN THE STASHED LOOT,FROM OFFSHORE JURISDICTIONS.So long as you are NOT a terrorist – beneficial ownership of bearer shares,Trusts and Foundations,is not pierced,in UK.Hence,through a maze of Trusts,SPVs,Foundations and Corporations – the money enters the UK.From the UK,the money can be invested in any part,of the world – with 100% Capital and Revenue Guarantee.

      Step 5

      But this is the Gem of the UK.All the Global Business,Financial consultants and Economists of the world,are stationed in London,feeding off Consulting,Tax, Accounting and Incorporation services, for all the economkic and financial fraudsters,of the world STATIONED IN LONDON.THAT IS TAX,ON THE STASHED CASH – WHICH goes to the Private sector (and partly from them to the state).But it keeps London,as the Financial nerve centre – and MOST IMPORTANTLY,keeps the Property Market afloat.Brits have STOPPED manufacturing.If the Property prices,in London crash – it will be the biggest financial disaster for the world, and will completely destroy,the British Banking System – which is the ONLY,viable economic activity,in the UK.

      But the magic lies ahead.Then these Global Business,Financial consultants and Economists, advise Pakistan,India and other nations with persuasion and coercion,to do a Tax Amnesty or a OTS – in around,say 7-10 years.By that time the,launderers have washed the money, multiplied it at least 2 fold, AND THE BANKING SYSTEM AND CURRENCY RATE,IN THE TARGET NATION (Pakistan/India etc.),is busted – and so,the launderers GET THE BEST DEAL (with the advice of the Global Business,Financial consultants and Economists).

      TAKE THE EXAMPLE OF THE INDON-ASS-EAN TAX AMNESTY. Guess the Tax rate ? 2 to 10% ! GUESS WHO WERE THE ADVISERS TO THE INDON-ASS-EAN Government ? Guess the amount that came in ? USD 330 Billion – more than 1.5 times Pakistan’s GDP.

      And then,the MOST important,In London,a Pakistani Tycoon,can partake in the Tax Amnesty,of any nation.So let us say that Jakarta declares an amnesty.A Pakustani Tycoon has 100 Million USD of dirty cash,in Gold or Bearer Bonds.There is an Indon-Ass-ean in London,with a legit business.The Pakistani Tycoon himself,or with others has several food shops or stores or schools,running for the last 5 -10 years.So the Indon-ass-ean invests USD 98 Million in the Pakistani Businesses,and takes the USD 100 million in Gold (which goes into a sealed vault).HOW THE INDON-ASS-EAN GOT THE GOLD,IS OF NO CONCERN,TO THE INDON-ASS-EAN GOVTT.He raises a secured loan at close to 0.30%,and then,wires the cash,to BNI in Jakarta.

      The Pakistani tycoon has washed his money for 2%.The Indon-ass-eean has earned 2%,for doing nothing.Then the most DELICATE PART of the trade – is to move the money OUT of JAKARTA.What is the magic when 330 Billion USD comes in ? The Indonesian Rupiah appreciates by 10-20% ! SO WHEN THE INDON-ASS-EAAN TYCOON TAKES OUT THE CASH,FRON INDON RUPIAH,TO USD – HE HAS USD 120 MILLION – for which he and the Pakistani Tycoon,have already struck a NDF deal,WITH THE FINANCIAL EXPERTS in London !

      For taking the money OUT of JAKARTA – you need expert Consulting Counsel.When the Money comes back to London,the Gold goes back to the Tycoon (in tranches) as the Pakistani Tycoon,BUYS back the stake sold,to the Indon-ass-eean and the FX gains are SPLIT.

      LONG Before the TAX amnesty – you will see frentic activity,in Purchases of Indonesian Paper,and Deposits in Imdon-ass-eean Banks,in Indon Rupiah – which will be pulled out,when the YTM declines,and the Indon Rupiah RISES,due to the USD 330 Billion.

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