Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

The FinCEN Files Revealed Huge Banking Problems. Now The World Is Trying To Fix Them.

The FinCEN Files Revealed Huge Banking Problems. Now The World Is Trying To Fix Them.

Exposing a torrent of dirty money that the world’s most powerful banks transact in plain view of government regulators, the FinCEN Files investigation has roiled the financial industry like few stories since the Great Recession — and catalyzed forceful action in the US and beyond.

In the weeks after BuzzFeed News, the International Consortium of Investigative Journalists, and 108 newsrooms around the world began publishing stories based on a cache of secret records, UK lawmakers launched a formal inquiry into Britain’s oversight of banks, members of the European Parliament advocated for a stronger response across the continent, and investigations were opened in countries ranging from Thailand to Liberia.

Significantly, the FinCEN Files provided a final push in Washington, DC, for passage of a momentous new law taking aim at one of the most effective money laundering tools cited in the stories: anonymous shell companies. The legislation, passed last week with overwhelming bipartisan support, requires many of these secretive American companies to disclose who owns them and who profits from them.

The Corporate Transparency Act marks the most substantial revision to anti–money laundering laws since the Patriot Act in 2001.

Provisions in the legislative package, tucked into the annual defense spending bill, also address many of the other systemic problems identified in the FinCEN Files, which exposed the ineffectiveness of government oversight and the myriad ways that banks fail to stanch the flow of dirty money.

Among those reforms: The Justice Department would have to file yearly reports justifying its use of deferred prosecution agreements — sweetheart deals allowing banks that have run afoul of anti–money laundering laws to avoid trial and criminal convictions. The US Treasury Department would also seek new technologies to better identify criminal money flows and to increase communication between the private sector and federal agencies. And those who blow the whistle on misconduct would get new protections.

Although President Donald Trump has vowed to veto the overarching bill — because it does not revoke an unrelated set of protections for social media companies — lawmakers could override the veto.

Public officials have cited the BuzzFeed News–ICIJ investigation as a reason the reforms gained support after years of inaction. “The BuzzFeed story makes clear we need to strengthen, reform, and update our nation’s anti–money laundering laws,” said Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee. “This action is long overdue.”


Sen. Ron Wyden

Sen. Ron Wyden, the ranking Democrat on the Senate Committee on Finance, also referred to the FinCEN Files on the day the legislation passed, saying: “Investigative reporting has shined a light on money laundering and sustained public interest certainly helped get these provisions across the finish line.” (Wyden supported the reforms but voted against the broader legislation for reasons unrelated to financial regulation.)


To pursue the FinCEN Files investigation, reporters on six continents sifted through a vast disclosure of suspicious activity reports, or SARs, from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The SARs detailed more than $2 trillion in suspicious transactions in nearly every corner of the globe, with reporters linking flows of money to terror groups, drug kingpins, and kleptocrats. The 16-month investigation established how banks have helped facilitate mass-scale money laundering and how national regulators have failed to reign in the criminals or clamp down on banks.

Weeks before publication, journalists working on the FinCEN Files informed government leaders of their findings and requested comment. Officials in the US and UK announced they would be changing anti–money laundering rules — the exact rules that the FinCEN Files showed were broken and ineffective.

After BuzzFeed News contacted the US Treasury Department, the agency announced that it would begin taking suggestions from the public and insiders on how to update the Banking Secrecy Act of 1970, which has long governed the country’s anti–money laundering policies. Lobbyists, banks, financial services firms, and academics submitted 110 comments, with many confirming what the FinCEN Files had shown: The US anti–money laundering protections badly need to be overhauled.

Meanwhile, on Sept. 18, two days before the first FinCEN Files stories were published, officials in London announced plans to improve the way the UK collects information about companies registered there.

“It is hard not to believe that the impending publication of the FinCEN Files forced their hand on this,” said Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute.

Once the stories broke into public view, the calls for reform grew louder.

British lawmakers launched a formal inquiry into the “deeply troubling” questions raised in the FinCEN Files. Parliament’s Treasury Committee vowed to examine what progress government regulators and law enforcement agencies have made in preventing money laundering.

Speaking in the European Parliament, politicians called for uniform regulations and stronger supervision in the form of a new oversight agency or greater powers for the existing body, the European Banking Authority.

“The existing anti–money laundering system simply does not work,” said Eero Heinäluoma, a Finnish member of the European Parliament, during a debate on the FinCEN Files. “It is a Swiss cheese, full of holes.”

Other national governments have also jumped on the findings. In Seychelles and Liberia, revelations by journalists were referred to anti-corruption units for further action.

At the same time, criminals and autocratic regimes, long accustomed to keeping their financial dealings secret, lashed out at journalists. Before and after publishing the FinCEN Files, reporters in countries in Africa and the Middle East were shouted at, intimidated, and threatened with lawsuits. In Turkey, a court blocked the publication of multiple FinCEN Files stories.

At the same time, the FinCEN Files have proven to be a powerful tool in the international fight for transparency and accountability.

Activists in Niger submitted a FinCEN Files story as part of a groundbreaking lawsuit seeking to force the government to open a corruption investigation into $120 million that an official audit said went missing. In Thailand, regulators are probing four domestic banks whose transactions were highlighted by an analysis for the series. And Belgian banks proposed the creation of a platform to exchange information about suspicious transactions, and American banks supported the legislation targeting shell companies.

The lobbying arm of the banking industry, by contrast, has attempted to downplay the investigation’s findings.

The Bank Policy Institute issued a statement, supported by ads on social media, attempting to throw cold water on the significance of the FinCEN Files.

The institute disputed a central finding: that banks sometimes continue to process transactions for customers who had been repeatedly flagged for suspicious behavior. The lobbying group said that the government “frequently” tells the banks to keep those accounts open so law enforcement agents can monitor them.

Among the documents in the FinCEN Files, however, BuzzFeed News could find only two mentions of any such instruction.

The lobbying group also has argued that a large portion of SARs have nothing to do with illegal activity. Citing survey information from 14 banks, the group said: “Our data indicate that about 4 percent of SARs result in any follow-up from law enforcement. A tiny subset of these results in an arrest and ultimately a conviction.”

The group also said: “Ultimately, this means that 90–95% of the individuals that banks report on were likely innocent.”

But a lack of official follow-up doesn't necessarily mean that the flagged activity was lawful. Federal investigators don’t have the resources to chase every lead and don’t automatically notify banks when they investigate the subjects of SARs, interviews with law enforcement officials show.

By law, banks must file a report when they spot transactions that bear the hallmarks of money laundering or other financial misconduct. SARs are not by themselves evidence of a crime but are considered vital for law enforcement to pursue illegal activity.

During a speech this month to the American Bankers Association, FBI Director Christopher Wray said SARs "capture an incredible range of conduct" and allow agents to "follow financial trails, investigate specific individuals and entities, identify leads, connect the dots, and advance investigations.” The records, according to law enforcement sources, can help trace parts of drug networks, clarify the financing behind terror cells, and help officials decide whether to blacklist companies or individuals involved in misconduct.

Contacted by BuzzFeed News with questions for this story, the Bank Policy Institute responded by again citing its own research on the issue and reiterating that the FinCEN Files was based on an “incredibly narrow” slice of documents, a fraction of the millions filed every year.

In the immediate aftermath of publication of the FinCEN Files, global banking stocks tumbled dramatically, but it was more than share values that had the industry buzzing. The series also prompted reflection and debate in a range of media and industry forums. “That banking scandal is a doozy,” the Independent, a UK publication, noted. “The reverberations ... will be felt for months if not years.”

In more than 100 opinion pieces and columns that have been published in trade and business publications since September, industry experts have pointed to the FinCEN Files while advocating for change. In International Banker, Laurent Liotard-Vogt and Florent Palayret, who work at the business management consulting firm Chappuis Halder & Co., proposed solutions, including regulations to prevent shell companies, and concluded: “It is the whole system that is on the verge of collapse and needs to be rethought.”

Nine days after the findings from the FinCEN Files investigation were revealed, Linda A. Lacewell, the superintendent of the New York State Department of Financial Services, published her own analysis, noting that the series provided an opportunity to tackle long-standing problems. “Now, with this new spotlight, we must act,” she wrote.


Sen. Elizabeth Warren


Sen. Elizabeth Warren, a member of the Committee on Banking, Housing, and Urban Affairs, has cited the stories in calling for substantive changes in oversight.

In a statement to BuzzFeed News this week, she said that the Corporate Transparency Act should be only a first step and she will advocate for additional reforms, including making Wall Street more accountable for financial crimes. “I'm going to keep pushing my legislation to hold executives personally and criminally liable when their organizations skirt the law.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
×