Dirty money: Global banks complicit in flow of illicit funds for years

Massive sums of allegedly dirty money have flowed for years through some of the world's largest banking institutions, said an international journalism investigation published on Sunday, which denounced shortcomings in sector regulations.

"Profits from deadly drug wars, fortunes embezzled from developing countries, and hard-earned savings stolen in a Ponzi scheme were all allowed to flow into and out of these financial institutions, despite warnings from the banks' own employees," according to the probe from Buzzfeed News and the International Consortium of Investigative Journalists (ICIJ).

The investigation, which was led by 108 international media outlets from 88 different countries, is based on thousands of suspicious activity reports (SAR) submitted to the US Treasury Department's financial law enforcement agency, FinCEN, by banks from around the world.

Banks aware of wrongdoing

"These documents, compiled by banks, shared with the government, but kept from public view, expose the hollowness of banking safeguards, and the ease with which criminals have exploited them," wrote US outlet Buzzfeed News, in the introduction of its report.

More than 2,100 SARs, which are in themselves not necessarily proof of wrongdoing, were obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) and other media organisations.

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

The ICIJ reported the leaked documents were a tiny fraction of the reports filed with FinCEN.

The investigation points in particular to five major banks – JPMorgan Chase, HSBC, Standard Chartered, Deutsche Bank and Bank of New York Mellon – accused of continuing to move assets of alleged criminals, even after being prosecuted or convicted for financial misconduct.

READ MORE: HSBC HK shares plummet after reported illicit activity

Dirty money feeds global economy

"The networks through which dirty money traverse the world have become vital arteries of the global economy," Buzzfeed News reported.

In a statement, Deutsche Bank said that the ICIJ's revelations were "well known" to its regulators. The bank also said it had "devoted significant resources to strengthening our controls," as well as focused on "meeting our responsibilities and obligations."

The investigation also highlighted the American authorities' lack of power in regulating dirty financial transactions.

In a statement released prior to the investigation's publication, FinCEN said that the "unauthorized disclosure of SARs is a crime that can impact the national security of the United States."