Money laundering is the handling of money obtained illegally to make it untraceable. You can be skimmed or scammed, and the money laundry takes your money elsewhere. It’s the modern version of fencing stolen goods or ripped-off assets. The money is laundered and goes into someone’s pocket.
This is done by organizations, individuals, and corporate entities every second of every day. Money laundering may also include purchase of assets with laundered money, investments, and similar “financial management”.
Banks are required by United States and the laws of other nations to prepare statements regarding possibly illegal transactions and movements of money. This reporting is administered by U.S. Treasury Department Financial Crimes Enforcement Network (aka FinCEN).
In a feat of inspired journalism, Buzzfeed obtained thousands of documents related to suspicious activity reports (SARS) prepared by banks covering $2 trillion dollars over the period 1999 to 2017. Many of the world’s biggest banks were involved. A virtual Who’s Who of banks is cited in the reports. Just pick a bank you’ve ever heard of, and it’ll probably be there.
Buzzfeed, in collaboration with the International Consortium of Investigative Journalists (ICIJ), analysed the reports to form a very grim picture of global crime. Read Buzzfeed’s initial release and associated links for the full story of the sourcing and searching of reports.
A tough and dangerous bit of journalism
In journalistic terms, Buzzfeed and their associates have done something truly remarkable, and truly dangerous. To start with, SARs are legally confidential by law. These FinCEN documents were by definition never intended for public release, let alone global nuking of the finance sector. An illegal leak of these documents is a truly major issue for all regulators.
That’s ironic, given that the Buzzfeed and ICIJ have done regulators a good service in clarifying the gigantic issues involved in money laundering. Money laundering does make the criminal world go round. This is how dictators, major league criminals, terrorists and human traffickers pay and get paid.
It’s also very risky journalism. Some of the parties identified in the SARs are well-known for their tendency to kill large numbers of people for doing much less than exposing how they do business. It was very gutsy work by Buzzfeed and ICIJ to take on this monster.
I don’t know if they give out Pulitzers for Earth-Shaking Extremely Important Information, but these guys would deserve one. Kudos can’t be enough. This is the real deal. The movement of money is critical to all criminal and other illegal organizations, and this story has opened the floodgates of information to the public.
What do the banks say? Not a lot, with admittedly good reason
Even talking about SARs is legally not allowed. The banks, hammered by previous convictions for money laundering malfeasances or not, can’t be specific on any matter. Buzzfeed also published rebuttals and such commentary as the banks were able to make regarding these issues. The overall impression is of banks in a very thankless position legally in many ways.
Some banks, notably Deutsche Bank, have been in big trouble before with US regulators. The banks are quite literally faced with multiple “damned if you do, damned if you don’t” scenarios. It’s not a great look, and it’s getting worse.
The problem for the banks is best illustrated by who or what is accused of suspicious activities. In one case, Deutsche Bank had Donald Trump and Jared Kushner cited as parties to SARs reports. The bank, according to The New York Times, was worried that it could be targeted by Trump administration regulators.
(Please be aware: Many people and entities have been named in connection with the SARs reports. Very few of these parties have been convicted. The vast majority have not been charged with any crime or illegality. The usual legal presumption of innocence applies in these cases, and these reports must be viewed as allegations only.)
What are governments doing? Absolutely nothing, on face value.
The sheer scale of money involved in the FinCEN allegations may be a tipping point in actual prosecution of offenders. This is far too much money to be swept under any rug.
However, very little, if any, regulatory action is happening in public. If there is any intention on the part of regulators to prosecute or penalize banks or anyone else, there are no indications. Criminals, terrorists and rogue states are apparently OK to continue doing business this way.
It’s unlikely that regulators would disclose any action they’re taking, but the general silence on global money laundering has been going on for decades. It’s no secret to anyone. That the problem goes much deeper is beyond doubt. Even venerable old companies like Western Union have been heavily fined for providing money laundering services.
…Now consider the hundreds of thousands of “money exchanges” around the world. Are they innocent? Supposedly, according to law. Could they provide the same services? Not an easy question to ask or answer, is it?
We have a situation where huge corporations and the financial sector in general are basically providing financial services based on human misery. There are also indications that some sectors, notably the very high billing entertainment sector and even online gaming and the Vatican, have been allegedly involved in similar money laundering operations.
This is a global make or break for law enforcement. Either anti-money laundering legislation has teeth, or it doesn’t. Either governments have the will and the intelligence to fight money laundering, or they don’t.
Right at the moment, money laundering is effectively perfectly safe for money launderers. Doing nothing when you have so much evidence IS a form of corruption. It’s a global catastrophe in terms of enforcement. It’s bankrolling the world’s most despicable organizations.
…And that’s obviously fine with someone, given the minimal reactions so far to the Buzzfeed/ICIJ revelations. The expectation is that anything worthy of being called a government or a law enforcement agency will take proper action.
This is a unique opportunity to disembowel money laundering and the people who do it. It could annihilate funding for many dangerous groups. Imagine all those broke terrorists and organized criminals and other parasites on humanity. Heartrending, isn’t it?
Governments have a lot to prove here. After September 11, the statement was made that the US government would go after the funding of terrorist organizations. There it is. What are you going to do about it? As for organized crime, how much softer on crime could you get than to allow it to move billions of dollars around in plain sight?
The problem is that people’s expectations of governments are so low that nobody expects much to be done. It’s like UFOs; if you see one and report it, what’s going to happen? Nothing.
Governments now need to prove they have any intention to take action. The information is there. The transactions are recorded with indications of serious offenses. Investigation and proper action are required by law. Now – Let’s see if that happens. If it doesn’t, it’s proof of the total corruption and failure of governments around the world.
