The Washington PostDemocracy Dies in Darkness

The Finance 202: Global banks process trillions in dirty money despite suspicions, investigation finds

with Brent D. Griffiths

Trillions of dollars in money connected to criminal activity are sloshing through global banks. The banks and U.S. authorities know it, and they’re not doing nearly enough to stop it.

These revelations come from the bombshell leak of more than 2,500 secret documents, most of which banks provided to the federal government over the past two decades.

BuzzFeed got hold of the records — the so-called “FinCEN Files,” referencing the nickname for the U.S. Financial Crimes Investigation Network, the Treasury Department office that collected them in the first place. The outlet then shared them with 108 other news organizations around the world.

Taken together, the files depict a stunningly widespread phenomenon of criminals, corrupt officials and terrorists taking advantage of lax banking oversight. “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,” BuzzFeed’s team writes. “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.”

And five banks in particular — JPMorgan Chase, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon — “kept profiting from powerful and dangerous players even after U.S. authorities fined these financial institutions for earlier failures to stem flows of dirty money,” the International Consortium of Investigative Journalists writes.

Among the investigation’s more explosive discoveries:

  • North Korea launders money through U.S. banks, using a complex strategy involving Chinese shell companies to end-run international sanctions meant to lock it out of the global financial system, NBC’s Andrew W. Lehren and Dan De Luce report, based on a review of the leaked documents. “The suspected laundering by North Korea-linked organizations amounted to more than $174.8 million over several years, with transactions cleared through U.S. banks, including JPMorgan Chase and the Bank of New York Mellon, according to the documents,” they write.
  • JPMorgan handled transactions “tied to the massive looting of public funds in Malaysia, Venezuela and Ukraine,” the ICIJ reports. The bank also processed "more than $50 million in payments over a decade, the records show, for Paul Manafort, the former campaign manager for President Donald Trump… Tainted transactions continued to surge through accounts at JPMorgan despite the bank’s promises to improve its money laundering controls as part of settlements it reached with U.S. authorities in 2011, 2013 and 2014.”
  • HSBC allowed a Ponzi scheme operator to continue funneling millions of dollars through the bank even after learning of the enterprise. “The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014,” and the scamming of thousands in the Asian and Latino communities in the U.S., the BBC reports.  “Regulators in California told HSBC it was investigating WCM777 as early as September 2013 - and alerted its residents to the fraud... HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after [the Securities and Exchange Commission] filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.”

Banks said they couldn’t discuss specific allegations due to bank secrecy laws. But Greg Baer, who heads the Bank Policy Institute — a lobbying group for the industry — said in a statement, “Clearly, there is more to this story, but unfortunately the reporting failed to unearth it, and the banks are legally prohibited from telling their side. In some cases, if the past is any guide, that story likely includes law enforcement asking a bank to keep open an account it has identified as suspicious so that law enforcement can track where the money is going and gather further evidence to support an arrest and conviction.”

BuzzFeed’s investigation points a finger at the federal government for failing to adequately police the misconduct. 

The Treasury Department’s financial crimes office collects suspicious activity reports, or SARs, from banks, to share them with international counterparts and law enforcement. “What it does not do is force the banks to shut the money laundering down,” the the investigative team writes. “In the rare instances when the US government does crack down on banks, it often relies on sweetheart deals called deferred prosecution agreements, which include fines but no high-level arrests.”

And some banks use SARs as a kind of shield against responsibility, "filing alerts about a huge array of transactions without actually moving to halt them. In some cases, banks filed numerous reports on the same clients, detailing their suspected crimes over the course of years while continuing to welcome their business.”

From the New York Times's Emily Flitter:

The Treasury Department’s financial crimes office said in a statement that “unauthorized disclosure of SARs is a crime that 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.” It said it had referred the matter to the Justice Department and Treasury’s inspector general.

But New York financial services superintendent Linda Lacewell said in a tweet that banks need to shape up and regulators must act, too:

Market movers

Futures signal a rough open.

Wall Street is trying to recover from a three-week slump: “U.S. stock futures fell sharply early Monday as a number of factors rattled traders amid a three-week losing streak for the market. Dow Jones Industrial Average futures lost 530 points, or 1.9%. The move indicated an opening drop of 470 points. S&P 500 futures lost 1.6%. Nasdaq-100 futures fell 1.3%,” CNBC's Fred Imbert reports.

“The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all fell for a third straight week. That marks the market’s longest weekly slide since 2019. Those declines came as tech shares — which led the broader market off its coronavirus lows and into record territory — struggled. Facebook, Amazon, Apple, Netflix, Google-parent Alphabet and Microsoft all posted steep weekly losses. The S&P 500 tech sector pulled back by 1 percent."

From CNBC's Carl Quintanilla:

Materials are lighting up the S&P 500: “The index's materials sector, which includes companies such as Linde PLC, Air Products & Chemicals Inc. and Sherwin-Williams Co., is up around 5.4 percent this month, even as the broader index has fallen more than 4 percent. The group has climbed 16 percent this quarter, the best performance among the S&P 500’s 11 sectors,” the Wall Street Journal's Paul Vigna reports.

“That’s a reversal from earlier in the year, when tech stocks including Apple Inc. and Google-parent Alphabet Inc. powered major indexes to new highs and the materials sector largely traded in line with the S&P 500.”

Coronavirus fallout

Powell, Mnuchin face questions from lawmakers on need for more stimulus. 

The two are testifying Tuesday before the House Financial Services Committee. The focus of the hearing “will likely fall on fiscal policy, with time running short for Congress to agree on another round of spending measures before it shuts down ahead of November elections,” Bloomberg's George Condon and Saleha Mohsin report. “Powell and Mnuchin are also due to testify before the Senate Banking Committee on Thursday, and the Fed chief will report to a separate House committee on the coronavirus crisis on Wednesday.”

From the U.S.:
  • At least 6,771,000 cases have been reported; at least 199,000 have died
  • Covid is upending middle-class families: “Millions of Americans have lost jobs during a pandemic that kept restaurants, shops and public institutions closed for months and hit the travel industry hard. While lower-wage workers have borne much of the brunt, the crisis is wreaking a particular kind of havoc on the debt-laden middle class,” WSJ's AnnaMaria Andriotis reports.
  • Nearly 11,000 people have been potentially exposed to covid on flights, CDC says: “But though the agency says some of those travelers subsequently fell ill, in the face of incomplete contact tracing information and a virus that incubates over several days, it has not been able to confirm a case of transmission on a plane,” Ian Duncan reports.
  • CDC acknowledges risk of aerosol transmission: “The CDC’s website previously stated that the virus primarily spreads between people who come into close contact — meaning within roughly six feet — and is transmitted ‘through respiratory droplets produced when an infected person coughs, sneezes or talks.’ The revised guidance notes that the virus can additionally be spread by means of ‘small particles, such as those in aerosols’ that linger in the air, and that breathing and singing can also lead to transmission,” Antonia Farzan reports.
  • U.N. General Assembly goes virtual, another blow to New York: “September is traditionally a banner month for New York visitors, with the UN General Assembly joined by the U.S. Open tennis tournament and Fashion Week. With efforts to get workers back into their Manhattan offices faltering and school openings delayed, businesses once again have to assess how long they can hang on,” Bloomberg News's David Wainer and Henry Goldman report. 
From the corporate front:
  • CEOs start to place big bets as they pivot: “Verizon Communications Inc. is jumping into the low end of the wireless market. Clorox Co. directors picked their next leader. A railroad set a new profit goal for the year. New owners are taking Neiman Marcus out of bankruptcy,” WSJ's Theo Francis and Jennifer Maloney report as companies conclude they will have to coexist with the pandemic for a while.
  • Meat went from being in short supply to being on sale: “Prices for ground beef and pork loins have returned to pre-pandemic levels, after surging as covid-19 sickened meat-plant workers and forced shutdowns. Some products, including chicken wings and prime rib, are cheaper now than they were before the pandemic began, according to data from Nielsen,” WSJ's Jacob Bunge and Jaewon Kang report.
  • EBay activates plan to shift more business to UPS: “The online auction and sales site eBay, one of the U.S. Postal Service’s biggest customers, said it is shifting some of its business to private-sector rival United Parcel Service because of reliability issues with the agency,” The Washington Post's Julie Zauzmer reports.

When superpowers collide

China details its own blacklist.

Beijing looks increasingly likely to push back on the White House: “China’s Ministry of Commerce released long-awaited provisions on its so-called ‘unreliable entity list’ over the weekend. The vaguely worded document mirrors the U.S. Commerce Department’s entity list that restricts named companies from accessing items originating in the U.S,” CNBC's Evelyn Cheng reports.

“The Commerce Ministry first announced it was establishing the unreliable entity list in May 2019. The move came shortly after the Trump’s administration said it was adding Chinese telecommunications giant Huawei to a blacklist, which prohibits the company from working with its U.S. suppliers. Provisions from the unreliable entity list released Saturday laid out consequences for a foreign entity — a company, organization or individual from another country — that is deemed to be a danger to ‘national sovereignty, security or development interests of China,’ according to an English-language version of the policy on the Commerce Ministry website.”

Trump gives his blessing, but TikTok deal isn't done yet.

The president said he has approved the agreement “in concept”: “The deal would give Oracle oversight of TikTok’s U.S. user data to satisfy government national security concerns stemming from TikTok’s Chinese parent company, ByteDance. But the deal is a big step back from the full sale of the app that Trump was initially pushing,” Rachel Lerman reports.

  • The fine print right now: “Oracle said in a news release Saturday that it would take a 12.5 percent stake in the new entity and would become TikTok’s ‘secure cloud technology provider.’ Walmart said it has ‘tentatively’ agreed to take a 7.5 percent stake. … Trump said Saturday that the new entity would ‘most likely be incorporated in Texas’ and that the firm would ‘be hiring at least 25,000 people. TikTok has its U.S. headquarters in Culver City, Calif., near Los Angeles."

TikTok is seeking a $60 billion evaluation: “Oracle and Walmart have rights to buy 12.5 percent and 7.5 percent respectively of a newly established TikTok Global,” Bloomberg News's Zheping Huang report.

“The valuation for TikTok has been a looming question as Washington and Beijing escalated their rhetoric over the negotiations. The service for the U.S. market alone has been estimated to be worth $20 billion to $50 billion, or even more. Snap Inc., for context, trades at a $35 billion valuation.”

Trump failed to secure several key demands. Bloomberg News's Nick Wadhams and Shelly Banjo report on how the current deal caves on many of Trump's previous requests:

  • Trump said he wanted the U.S. part of the business owned by an American company: “But China’s ByteDance Ltd. remains the majority shareholder.”
  • Trump said he wanted the data to stay in American hands: “But the algorithm itself ― the thing that makes TikTok TikTok ― will still belong to ByteDance, so national security concerns remain, experts said.”
  • Trump said he wanted a government payout: That turned into a vaguely worded promise of $5 billion in new tax dollars to the U.S. Treasury. The company also said it would create a new ‘education initiative’ to teach kids reading and math online. Still, Trump said he was satisfied.”

Campaign 2020

Democrats raise $100 million in court fight.

The fight to replace Justice Ruth Bader Ginsburg has sparked a slew of donations: “ActBlue, a key fundraising platform for the left including Joe Biden’s campaign against Trump, took in more than $103 million between the announcement of Ginsburg’s death and just after noon Sunday. Using ActBlue, donors earmark money for Democratic candidates and causes they want to support,” Bloomberg News's Bill Allison reports.

“Donors set records for the amount raised in one day on Saturday, giving $70.6 million, and twice broke the record for donations in one hour. In August, ActBlue brought in $485.4 million, or about $15.7 million a day.”

  • Outside groups plan blitz on Ginsburg's replacement. “Many of those leading the effort say the various campaigns will spend millions to sway lawmakers” after Trump names his pick to replace the justice, CNBC's Brian Schwartz reports. “Beyond the political issue based groups that will be involved with this bitter battle, super PACs backing both Biden and Trump are preparing for the upcoming Supreme Court debate in Congress to filter over to the presidential campaign."

Biden surges ahead of Trump in race for campaign cash. “Democratic presidential nominee Joe Biden gained a significant cash lead last month thanks to a record-breaking fundraising boost, entering September with a staggering $466 million compared to [Trump’s] $325 million, according to figures from the campaigns,” Michelle Ye Hee Lee and Anu Narayanswamy report

“The latest cash-on-hand figures mark the first time Biden has gained a cash advantage over Trump by posting a $141 million lead, a stunning reversal of campaign resources buoyed last month by his vice-presidential announcement, the Democratic National Convention and an aggressive fundraising schedule featuring high-profile surrogates.”



  • Treasury Secretary Steven Mnuchin and Fed Chair Jay Powell testify before the House Financial Services Committee about their respective pandemic responses
  • The National Association of Realtors releases data on existing home sales for August
  • The Joint Economic Committee holds a hearing on the economic impact “on the failure to contain the coronavirus"
  • Nike, AutoZone, KB Home and Stitch Fix are among the notable companies reporting their earnings, per Kiplinger.


  • Powell is set to testify before the House's Coronavirus Select Subcommittee
  • The Senate Budget Committee holds a hearing on the CBO's outlook
  • Anthony S. Fauci, FDA Commissioner Stephen Hahn and CDC Director Robert Redfield testify before the Senate's Health, Education, Labor and Pensions Committee
  • General Mills and Cintas are among the notable companies reporting their earnings


  • Mnuchin and Powell testify before the Senate Banking Committee for the quarterly Cares Act update
  • The Labor Department reports the latest weekly jobless claims
  • A House Small Business subcommittee holds a hearing on PPP
  • Costco, Darden Restaurants, CarMax, Rite Aid and BlackBerry are among the notable companies reporting their earnings


  • A House Ways & Means subcommittee holds a hearing on restaurants during the pandemic

The funnies

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