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FinCEN Files show trillions in tainted dollars flow freely through major banks (icij.org)
539 points by mhoad 40 days ago | hide | past | favorite | 212 comments

I used to do this for a living (evaluate flagged transactions and write SARs). The general idea here is partly right and partly wrong.

The part that's right: some of the people banks employ are absolutely willing to make a dollar no matter what it takes, and they will happily look the other way when suspicious activity is pointed out to them. I found this attitude particularly prevalent among some of the salespeople.

The part that's wrong: these are not mostly easy or obvious decisions. Banks don't just know that a transaction is indicative of illegal activity. A regular part of my job was debating with my coworkers about whether we should be concerned by some transactional pattern. More than once I followed bank policy and flagged activity conducted by wealthy people that turned out to be completely legal. The reality is that while some cases are cut and dry, most of them fall into some grey area and require thoughtful judgment.

What makes it even worse is that preventing transactions may not even be the best course of action when suspicious activity is identified. A classic example is Paul Manafort's activity with the Bank of Cyprus. BoC compliance officers questioned Manafort about some of his activity, at which point he immediately stopped transacting through the bank. This is obviously anathema to law enforcement, who would prefer not to alert their targets.

All of this is to say: AML policy in the U.S. is a big mess, and even though it's meaningful work, I'm glad I got out of it. Until there is some kind of rational regime, bank officers are damned if they do and damned if they don't.

Right, and the expected course of action isn't to freeze the customer’s funds

Worst case is to end a banking relationship because the bank doesnt know what to do with them and just give them their money in a check. The transaction will still happen, multiple transactions in fact.

The average case is just making the SAR and spamming the regulator.

Its a dumb regime, like you said.

The US should just get out of the business of spending resources on this. Which it partially seems like the regulator is trying to do :)

The argument of the article is that the journalists involved further investigated the transactions and determined that a lot were shady and that the regulators were failing to do their job ... or the banks were defying the regulators when the regulators were complaining. There was no claim of "every FinCEN proves a dirty deed" - it's explicit in the article.

The article makes a lot of bold claims that assume the truth of various unproven allegations. Journalists - who are paid to come up with dramatic sounding stories - are the exact opposite of the arbiters of truth when it comes to crime. Examples:

"people and companies tied to the massive looting of public funds in Malaysia"

Tied to? Tied by whom?

"more than $2 million for a young energy mogul’s company that has been accused of cheating"

Accused of? Accused by whom?

"amid a swirl of money laundering and corruption allegations spawning from his work with a pro-Russian political party in Ukraine."

A swirl of allegations? Alleged by whom? Additionally the article is filled with deceptive writing.

"In some cases the banks kept moving illicit funds even after U.S. officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes."

This sounds like the warnings were about specific mobsters/etc but it's carefully phrased to avoid claiming that. Yes, the USG tells banks to fight crime, everyone who ever opened a bank account knows that, this is not news.

"Suspicious activity reports reflect the concerns of watchdogs within banks and are not necessarily evidence of criminal conduct or other wrongdoing. Though a vast amount, the $2 trillion in suspicious transactions identified within this set of documents is just a drop in a far larger flood of dirty money"

One sentence after admitting that SARS aren't actual findings of criminal activity, they literally say that all those transactions are a part of "a flood of dirty money". They know that's not true! It's kind of sad, really. Journalism has reached the point where my first reaction to investigative journalists writing about leaked files is, "how are these liars going to BS me today?". It's a long way from the heydey of the Snowden leaks.

The “policy take-away” from the article seems to be that governments let it happen. I wonder if anyone on this board understands whether government inaction is due to incompetence, complacency or corruption. I guess like many issues these days it’s a bit of all 3, but I say that on the basis of my priors rather than domain experience.

You also need to consider the possibility that it's in the government's interest to allow a certain amount of otherwise-unlawful activity to occur, and make the perpetrators think it's going unnoticed, to trace a broader pattern/catch a bigger fish.

Have you watched the Netflix Dirty Money episode about this? You might find it interesting. One of the things it claimed about what HSBC was doing was that they were simply failing to even acknowledge the flagged transactions and had a huge backlog of reports that were not only for very suspicious amounts but also transfers to/from entities that were on federal sanctions lists, and the blacklist was stupidly implemented so it could be bypassed by replacing e.g. XYZCO with XYZ-CO or XYZ.CO. Some AGs told them they had to get off their asses and start processing these reports, and they responded by hiring a sweatshop of inexperienced accountants and told them to just go through the backlog and close the reports without investigation.

The show is called Dirty Money, and the episode is "Cartel Bank" from season 1.


Isn't part of this not just the gray area of knowledge, that you don't know if a given pattern of activity is necessarily illegal, but the gray area of law and even more, the gray area of legal and regulatory decisions, that the banker might not know if a given sort of activity would be considered worth prosecuting by given authorities according to their interests and priorities. And that bankers might indeed know that some flagrantly illegal activity might well be entirely ignored by authorities based on said authorities interests and the actors connections.

I find this all hilarious. I had to help my mom with her internet bank. She had to send a selfie and fill in a bunch of paperwork for a savings account with €6000 on it.

Meanwhile these Russians are laundering €6000000000 and I doubt any Russian billionaire was asked to take a picture of themselves.

They probabably had to be present in flesh and blood with documents to prove his identity.

I haven't looked into the individual cases this is about and I'm certain that some crossed a line, but with regards to the following:

> The leaked documents, known as the FinCEN Files, include more than 2,100 suspicious activity reports filed by banks and other financial firms with the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

First, the banks actively filed these reports, so it's not like they were trying to hide these transactions. The ones they really wanted to hide, you won't find in these reports.

Second, the bar for "suspicious activity" is usually set quite low -- it's usually literally just activity that doesn't seem 100% kosher. You don't know of any wrong-doing (because if you did, you'd be an accomplice), but something just does not smell quite right.

Banks report these because they are required to. If they don't and they get caught in an audit, there are hefty fines.

Edit: Note that these reports are filed immediately when the activity occurs and regulators can jump onto the activity straight away. So while one can accuse many banks of committing many sins, a suspicious activity report is not something that I would normally consider sinister.

> First, the banks actively filed these reports, so it's not like they were trying to hide these transactions. The ones they really wanted to hide, you won't find in these reports.

The takeaway I got from the article was the banks filed the reports, but the government organisation designed investigate and take action is underfunded and staffed so reports probably never get read or actioned upon.

So the banks continue doing custom with those they suspect are doing bad things.

That's not the only takeaway and the article and ICIJ are in the business of not providing any other takeaway.

I used to work for a US Federal financial regulator. Suspicious Activity Reports are discriminatory and that is how they are used. From the in person bank teller to the compliance officer behind the scenes.

ICIJ handpicked a few reports with "big numbers" that people could "get mad about" while providing no context about what should have happened. That’s their entire modus operandi. An alleged ponzi scheme that already settled with US authorities is not the same as a sanctions evading money mule. The expected outcome is not the same. What is the goal here? "Omg the bank filed a SAR and nothing happeneedddd 111!" What was supposed to happen?

This is a pointless dragnet. 9/11 wasn't that expensive, 6 figures at best. The Bank Secrecy Act and the subsequent Patriot Act would not have flagged the terrorists' transactions. They prevent nothing. If HSBC was laundering billions for the literal cartel for a decade after 9/11 and nothing happened, then what does that tell you about people? Dangerous organizations aren’t trying to attack American soil. Maybe they just want to have a nice life at the end of the day. Stigmatizing transactions is supposed to make that observation feel uncomfortable, its still not the way to curb the actual behavior we want to stop. All we have is a massive data mining operation and another way to imprison unintended targets. These regulations only ensnare individuals who have "will the bank/government freeze my $10,000 dollars" money because of that individual's complete unfamiliarity with reality and segregation from financial literacy. The US should get out of the business of whitelisting transactions as it is expensive and a complete waste of public and private sector resources.

Right now we have a mixture of the regulators being swamped, and the regulators using discretion that no politician can risk their career on.

It’s not illegal to do business with people you ”suspect” of doing “bad” things. It would be the most Orwellian thought crime if it was.

Banks have to file a SAR for any group of transactions over $25,000, do you expect them to stop doing business with anyone who accumulates transfers over $25,000?

> Banks have to file a SAR for any group of transactions over $25,000

This is manifestly false. The $25k number is only for suspected violations of federal law in that amount or larger, not every time I buy a car or transfer $25k to my brokerage account.

Source: https://www.fincen.gov/sites/default/files/shared/FinCEN%20S...

Sure, I shouldn’t have said every $25K transaction.

But from your link: “Violations aggregating $25,000 or more regardless of a potential suspect. Whenever the bank detects any known or suspected Federal criminal violation, or pattern of criminal violations, committed or attempted against the bank or involving a transaction or transactions conducted through the bank and involving or aggregating $25,000 or more in funds or other assets, where the bank believes that it was either an actual or potential victim of a criminal violation, or series of criminal violations, or that the bank was used to facilitate a criminal transaction, even though there is no substantial basis for identifying a possible suspect or group of suspects.”

That’s such a hugely broad definition that it encompasses many innocent transactions. If a bank isn’t 100% sure about you or your business, a SAR covers their ass.

I once had a bank decline to allow me to make large cash withdrawals because I was a new customer. They had no evidence I was doing anything improper. It was my funds, that I frequently deposited directly as cash.

But mere “suspicion” is enough to restrict my rights, to protect the bank from regulators.

If I know or suspect someone is breaking into my home or business, it's reasonable and customary to report that to the police.

If the bank knows or suspects criminal activity is occurring, how is reporting that any different?

Also the headline 'by serving oligarchs...' so what? Last time I checked beeing an oligarch was legal. This article reads, I dont know how to describe best, like xenophobic? Like who would do business with rich foreigners if not shady banks? I mean how are the banks supposed to smell if the transactions/client are dodgy?

Probably referring to people like African oligarchs who steal international aid intended to help their citizenry and Russian oligarchs who engaged in a variety of criminal shenanigans during the nationalization of USSR agencies in 92, among others.

True, but in that way "oligarch" is being used (as it always is) as a slur against the foreign wealthy that implies wrongdoing, rather than naming it. I agree virtually 100% of the time that the way people named as oligarchs accumulate and maintain their wealth is terrible, I just don't know any criterion justifying why the wealthy in the US aren't also referred to as oligarchs and the same protocols applied to them. I think they aren't because they own the US media and political parties, just like named oligarchs do back in their home countries (where they aren't referred to as oligarchs, but instead in respectful tones.)

There is no such criterion. The US is full of oligarchs. It’s just not commonly used to describe them because US oligarchs own, among other things, the definition of the word oligarch in the US.

It’s not the transfers that are problematic, it’s the theft.

In many cases, the transfers serve the purpose of laundering the theft. Consider cases like 1MDB, where the bankers' sole job was helping Jho Low hide the fact that he was stealing all the money.

(Although it must be noted that the regulatory regime here failed to prevent 1MDB!)

Do you have a link which elaborates this more? (The bankers helping jho low to hide the fact)

The Guardian has (https://www.theguardian.com/world/2016/jul/28/1mdb-inside-st...) a pretty good overview of the scenario. The basic trick was to create an account owned by Jho Low (or in some cases by his co-conspirator Najib Razak), say "this account is owned by 1MDB", and send a bunch of 1MDB's money to it. The Goldman bankers' roles were to set up investment deals, bond offerings, etc., in order to create a plausible explanation for why money needed to go to these fraudulent accounts.

I read the article, it doesnt explain the wrongdoing of goldman. It states they set up the bond offering. Where do you get the information that goldman new about it beeing a private account? Or do you mean it was jho low private account at goldman?

I mean if the board of a sovereign wealth fund assign your bank to raise funds and transfer to a designated account is this wrong, or unusual?

It's not inherently wrong or unusual, but banks have an affirmative and well-known duty to perform due diligence, to the point where deliberately attempting to evade due diligence or your bank's compliance department is near-ironclad evidence of deliberate wrongdoing. A senior Goldman Sachs official involved in those efforts did indeed plead guilty to knowing about the money laundering. (https://globalinvestigationsreview.com/digital_assets/db4e57...)

Thanks. Is the guilty plead about 1mdb?

It is. It's focused on the benefits that Leissner obtained for himself and Goldman Sachs and the bribes that were paid to facilitate and overlook things, since those are the two aspects subject to US jurisdiction.

Agreed. I feel that at some point, this "crying wolf" over any transaction causes more issues than prevent them (see the recent issue about paypal not sending payments with an animal name in the transaction)

People react to these news with outrage then are surprised to know why their bank account gets locked up or some seemingly innocuous transaction causes suspicious. Meanwhile, those who want to move large quantities of money illicitly will continue to be able to do so with ease.

One can also hide things by sending an overwhelming amount of noise to drown out the signal.

They are required by law to file SARs. If the huge volume of SARs are overwhelming the regulators, perhaps the regulators should not have set the requirements so ridiculously broad for filing them.

It sounds like inflation and legislature's stubborn refusal to index value thresholds to inflation or cost of living for whatever reason (innumeracy, a desire to sneak in laws becoming stricter over time, wanting to set up future opportunities for horse-trading) is partially to blame. $25,000 isn't trivial but it is less than it used to be.

It’s not inflation, the level never made sense when it started. Maybe $1M, but even the basis of this reporting makes little sense.

Go deposit $9,000 in cash at your bank. Later in the same day deposit $1,000. You just committed a federal crime called structuring.

The idiocy of this crime is that technically it’s not that hard to make an SQL query to easily detect when someone deposits 10K over a single day so that shouldn’t be even an issue for law enforcement in the first place

Regulators aren’t completely inept and will catch on to this.

Edit: to elaborate, too many false positives will be interpreted as a broken AML policy and that alone is already grounds for penalty.

I realize its a long article but it really deserves being read before jumping on the first trigger word (suspicious activity report).

You are right and I as I said, many banks are guilty of many sins. But the emphasis on SARs is from the article itself, and the SARs appear to be how they arrived at the $2T.

Let me get this straight: the core accusation is that banks are flagging suspicious transactions to the relevant authorities, then proceeding to process the transaction.

Did I miss something?

The authors seem to be implying that the banks should have blocked the transaction, to which I ask: do we really want the banks to act as judge, jury and executioner? Isn't the real scandal here that these SARs are apparently not being investigated by actual law enforcement?

Quote1: "In some cases the banks kept moving illicit funds even after U.S. officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes."

I don't know if it's true but it's clearly making a strong claim. It's remarkable that all the highest voted comments summarize the article as only claiming that there was a problem because a FinCEN was filed. Clearly, the article is about the particular interpretation of those FinCEN files.

Quote2 (edit): "Along with sifting through the FinCEN Files, ICIJ and its media partners obtained more than 17,600 other records from insiders and whistleblowers, court files, freedom-of-information requests and other sources. The team interviewed hundreds of people, including financial crime experts, law enforcement officials and crime victims."

IE, the organization did their own investigation and found a lot of shadiness - they allege. But they are very clear that just FinCEN doesn't prove an illegal transaction.

Link? I completely missed this...

I'm quoting the linked article

Search in the article for the quotes.

I suppose the article has several places where it might look like it ends but doesn't.

Ah right you are. That was exactly the problem.

You missed this:

> The FinCEN Files show trillions in tainted dollars flow freely through major banks, swamping a broken enforcement system.

What does “tainted” mean? That seems like a weasel word to imply something nefarious without proof.

As the OP stated. The banks are flagging these transactions as per regulations. Should we have them block every “suspicious” transaction?

Quote (again): "In some cases the banks kept moving illicit funds even after U.S. officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes."

The situation and the article is only slightly complicated. Why are there so many folks not getting it?

How does the bank determine who is e.g. a mobster? If a judge, or maybe even the police says "person X is a mobster don't do transactions with them" it's pretty clear and I'm sure they'd comply. Otherwise it's again a totally ambiguous statement since it implies the bank would need to do the police's job better than the police.

I think the key is your statement says "in some cases" and the parent quote is "trillions of dollars in tainted money".

I'm not arguing the banks are innocent here. Just that the author seems to be bucketing all of the different cases, that range from outright illegal activity to simply "suspicion", together.

The ICIJ and ProPublica consistently put out the highest quality investigative journalism, exposing injustices committed by some of the biggest institutions in the world. Blows mainstream media out the water.

I strongly recommend users here to donate to both, and even to cancel subscriptions to major media institutions, who have opted to dropped investigative journalism for sensationalism.

[1] https://checkout.fundjournalism.org/memberform?org_id=icij&i...

[2] https://donate.propublica.org/give/141278/#!/donation/checko...

Blows mainstream media out the water.

Because its reporters are from the "mainstream media." Often reporters who could not get any further in their old companies, or who were cut from their organizations due to budget cuts.

cancel subscriptions to major media institutions

...and that's why those budgets got cut, and large media organizations became more reliant on advertising money, instead of subscriber money.

News isn't free. It's good that you appreciate strong journalism. But robbing Peter to pay Paul doesn't work.

Even if your local newspaper is terrible, you should still support it financially so that good people can still try to do good work, and not disappear altogether.

My local paper is bad. But I subscribe, and reading it (actually reading, not looking at a web site) have learned that there are good people there trying to do good work. Between the lines you can see that they are underfunded, and do a lot with very little.

I also subscribe to large, award-winning important journalistic endeavors. "Real news," as it were. But I also know that award-winning journalism doesn't magically appear out of thin air, or straight from journalism schools. Those reporters have to learn their trade at small newspapers, television stations, and radio outlets to work their way up to the big leagues. If we don't support local reporters, there won't be any smart journalists in the future.

"News isn't free. It's good that you appreciate strong journalism. But robbing Peter to pay Paul doesn't work.

Even if your local newspaper is terrible, you should still support it financially so that good people can still try to do good work, and not disappear altogether."

No. If you pay the same money to Paul who creates better content, you are voting with your wallet. Everyone should do that. Definitely dont stay with sucky provider but give the same money (or more) to someone better, that helps things to develop.

voting with your wallet

That works for cans of soup, it doesn't work for journalism. This isn't a fight between companies. It's about preserving democracy.

You seem to be under the impression that if enough people subscribed to some very good national publication that it would somehow start covering local school board elections. That simply won't happen.

That's why we need local media. Those local, low-level politicians have to be held accountable, or they end up becoming congressmen and senators, and other high-level officials.

> You seem to be under the impression that if enough people subscribed to some very good national publication that it would somehow start covering local school board elections.

Not implausible; enough US attention drawn to a particular British publication got GuardianUS to happen; why wouldn't enough paying attention to a national publication and the stories it already has about a particular locality from local residents be a signal that would lead that publication to opening up a locally-focussed offshoot in that locality?

Not implausible

Actually, the 20 years I spent in journalism tells me it is completely implausible.

a locally-focussed offshoot in that locality?

Because there are over 15,000 school districts in the United States. Plus another 20,000 municipal governments. Plus another 100,000 other local government organizations.

The Guardian, or a similar organization, would need a staff the size of Apple or Google to even just scratch the surface of local news in the United States.

And even if it did, people would demonize it because it was centralized, or at one time published an article they didn't agree with, the way they do with the New York Times and the Washington Post.

Applying mass market economics to news is what destroyed journalism in the first place.

I'm old enough to remember that when Capital Cities bought ABC, and General Electric bought NBC, and Westinghouse bought CBS, suddenly those broadcasters were beholden to stockholders and not the public. That was when television journalism started dying.

> Because there are over 15,000 school districts in the United States. Plus another 20,000 municipal governments. Plus another 100,000 other local government organizations.

> The Guardian, or a similar organization, would need a staff the size of Apple or Google to even just scratch the surface of local news in the United States.

So, what? It wouldn't happen all at once or with just one organization, anyway. Maybe the Guardian sees demand from it's subscriber base for an additional product with local coverage in a couple of places, initially, and expands imto that. Maybe someone else does it in other localities.

Now, personally, I don't think there is an adequate market for profitable paid non-ad-supported local news of the type that we are used to thinking of as general need coverage because the people willing to pay are a narrower group with deeper and more focussed needs, but nonprofit quasi-patronage model like the Guardian and some others could work.

> Applying mass market economics to news is what destroyed journalism in the first place.

No, what destroyed the traditional news media is not understanding the value proposition and drastically cutting newsrooms in shortsighted consolidation, a mistake which it hadn't recovered from and was maybe just starting to recognize when new media came along and made it impossible to recover other than by largely becoming the new competition.

What killed journalism is...nothing. There's a lot of rose-colored glasses about the more opaque bias of the time when the media, top-to-bottom was far more uniform in it's bias than it is today, and when the major media were even narrower in their ownership, because people mistook (and mistake Even more in retrospect than contemporary audiences did) the uniformity of vías for neutrality and objectivity, but journalism is no less alive today than at any time in the past. Probably far more.

>I'm old enough to remember that when Capital Cities bought ABC, and General Electric bought NBC, and Westinghouse bought CBS, suddenly those broadcasters were beholden to stockholders and not the public.

Dang. You old. It's like a different world now, that there's no news you can rely on. Oh they'll scream and cry and say "but they don't exert editorial control . . ." (but they fucking do).

They don't need to cover the entire US to cover some local news

> They don't need to cover the entire US to cover some local news

The New York Times does cover New York regional news (examples below)

but I doubt even the New York Times could do this nationwide (even with the famous slogan "All the News That's Fit to Print").


archived just now, https://archive.fo/1KRju , it contains news such as

https://www.nytimes.com/2020/09/20/nyregion/nyc-subway-derai... archived at https://archive.fo/WTOgz and at https://archive.fo/lR9A1

> Subway Car Derails After Object Thrown on Tracks, Police Say

> Three people had minor injuries after a northbound A train jumped the tracks at the 14th Street station, officials said.

It also has pieces like this


archived at https://archive.fo/UXgM0 and at https://archive.fo/P7kU8

> Why Giving Food Stamps to the Rich Is Not a Terrible Idea

> Every child in N.Y.C. public schools was given a $420 benefits card. The well-off should use theirs to support food banks.

> A few weeks ago, I received a text from an 855 area code telling me that I might be eligible for food stamps and to call the number provided to find out. Given that I am sufficiently compensated for what I do, I deleted the message assuming it was a scam (which it turned out to be).

> Soon enough, though, friends living in well-appointed Brooklyn brownstones began reporting, with appropriate astonishment, that they had received debit cards, in the mail, issued by the state for $420 each, which were meant for purchasing food.


No. If you pay the same money to Paul who creates better content [...]

But that manifestly doesn't happen. Nobody wants to pay 20 different local bloggers to cover 20 different local issues, large firms asset strip or crowd out small firms, and if all else fails the truth is denounced as 'fake news'. The market is not a meritocracy.

I find this way too charitable to mainstream media organizations, but I don’t have the right understanding to make an argument against.

My impression is that there’s too much news produced. Journalism makes people feel more depressed, and editorial sections are of the most read and most filled with junk parts of publications. Facebook and Google are complicit in generation of division and fake news, but news media has been complicit toward that end my entire life. Most mainstream publications seem to push a particularly narrow neoliberal mindset and little else.

Local news has been filled with poison and junk since at least the mid 90s from my recall.

This is very hard to find these days, but if you can, try to subscribe to a local newspaper that is not owned by a hedge fund. A friend is a reporter at a smallish hedge fund-run local newspaper in Northern California and has many horrible stories about the slashing of resources and dilution of quality all in the name of maximizing gains for some faraway owners since the hedge fund took over about a decade ago. [1]

Also, try finding an alt-weekly if your city is lucky enough to still have one. [2]



> ...and that's why those budgets got cut, and large media organizations became more reliant on advertising money, instead of subscriber money.

Newspapers had chosen to became online ad-ridden tracker infested (5MB script for 5kB of article) junk quite a while before the entire publishing industry was even willing to admit that, maybe, people didn't like paper as much any more.

Sure there may be some quality journalists funded by this.

But even for the "quality" outlets, you can see that, in quantity the ad money drives clickbait trash articles (pretending to make money for the "quality" articles, but this ultimately has to end up just making money to make more clickbait trash).

News websites are in fact the only mainstream websites I visit, where I feel I need my adblocker to "protect" me, instead of just blocking annoyances. Mainly because it's just so much script compared to content.

I canceled my subscription to my local newspaper because of the number of advertisements and trackers on every page. I would happily pay for a subscription. I expect it to cost more than an option supported by advertising. But they do not want to sell me such an option. The newspapers had decades to figure this out. Serve readers/subscribers or serve advertisers.

But they do not want to sell me such an option

Sure they do. It's called print.

Whitney Webb is doing pretty well on her lonesome. So the excuse for establishment press to hide establishment crimes is because we don’t pay for subscriptions.

In case of this specific item, you may want to see if Google still digs up the story of how the chancellor of exchequer flew to DC to stop DoJ. Very interesting story. (And why are the shady banking outfits in the islands of “the Crown”?)

”The involvement of the United Kingdom's Financial Services Authority in the US government's investigations and enforcement actions relating to HSBC, a British-domiciled institution, appears to have hampered the US government's investigations and influenced Department of Justice's decision not to prosecute HSBC".

That’s from a congressional report. Please pay NYTimes so they will look into this :(

Please pay NYTimes so they will look into this :(

I already do. Do you?

This is a depressing misunderstanding of how this kind of journalism works, particularly in the case of the ICIJ. It is mainstream journalists doing the work -- journalists who, in today's media economy, and with the increased complexity of data-led investigations, can't afford to do the work in isolation.

Each organisation brings different skills, not to mention legal budgets. David Leigh, one of the most highly-regarded British investigative journalists, puts it best when he says there's a big difference between knowing about a scandal and knowing you can publish a story about it.

I've worked with the ICIJ in the past, and even my tiny tiny contribution (a small part of the Paradise Papers work) was exhausting. Please, a little more respect for the mainstream journalists who do this work day in, day out.

This is a very poor example then, it’s a mish-mash of accusations that misrepresents the obligations of banks and ignores the rights of account holders.

Just filing a SAR doesn’t obligate a bank to freeze the funds, that’s a job for regulators. Taking your funds away just because of wrong headed suspicions should be illegal, but happens regularly and this “article” excoriates bank’s first not doing it more often.

Agree. Quoting "documents identify more than $2 trillion in transactions between 1999 and 2017 that were flagged by financial institutions’ internal compliance officers as possible money laundering or other criminal activity — including $514 billion at JPMorgan and $1.3 trillion at Deutsche Bank." Banks told regulators. They didn't do anything and the article doesn't ask why

Not sure I agree. It's an extremely effective peice of reporting that shows not only that AML enforcement, as it exists today, is fundamentally broken and easily subverted but also gives a good overview of the perverse incentives, banking and political, that cause it (and the scale of the task needed to fix it).

Nothing in the article suggests "taking people's funds away". The main focus is how meaningless and small the incentives are for major banks to "do the right thing" and the horrendous effects them turning a blind eye has on countries and their populations.

I'm sure the big banks (i.e. those with a global footprint and offering U.S. correspondent accounts - essentially the primary enablers for global laundering) would behave very differently if they faced the real prospect of being whacked with a large regulatory stick (e.g. being cut from USD payment/clearing networks or fines of 5% of global revenue and personal criminal records for the worst offenders within their ranks).

The problem is it's not only Russian kingpins and corrupt Ukranian politicians who need their money laundering. An awful lot of financial corruption also exists/originates within the West. Overhauling and fixing a system that aids and abets all these powerful entities is not easy.

Banks are constantly being whacked with sticks, but that will never prevent a tiny percentage of millions of bank employees from accepting bribes to subvert their banks controls.

This price is entirely one sided and ignorant of the damage those regulations inflict on honest bank customers. The hundreds of thousands who’ve had accounts closed, or funds seized, without explanation or recourse.

When professional journalists write a one sided advocacy piece ignorant of the damage the course they advocates causes, they are also advocating more aggressive account seizure and system lockout for innocent customers, whether they realize it or not.

I wonder if it's a scale problem at its heart.

A single-branch local bank could legitimately know their customers on a personal basis and their dealings. Joe-bob comes in with $12k in cash? But we already knew through social circles he just sold his truck, so that's not really suspicious. The guy who has never interacted with anyone outside the county and is suddenly requesting wire transfers to Outer Slobavia? Likely money mule.

I doubt that HSBC can maintain that level of awareness, so we build clunky rules to simulate it.

Correction: the transfer to outer Slobavia is much more likely for poor family. But the bank will refuse it to minimize their exposure.

Agreed, the video and on surface reading is very much not what compliance/regulation enforcement action that banks really do.

And then it's the hot potato, what is trust in a banking system if your money doesn't show up? What about holding the funds itself, creates a liability problem for the bank?

I also am surprised this was written by "Buzzfeed news" too.


I haven't dug into it fully, but, surface wise, it's truly a misrepresentation of the financial system, SWIFT, FEDWIRE and remittances.

> The ICIJ and ProPublica consistently put out the highest quality investigative journalism, exposing injustices committed by some of the biggest institutions in the world. Blows mainstream media out the water.

ICIJ is the mainstream of mainstream. It's as mainstream and establishment as you can get. Also propublica is mainstream as well and created by bankers ( ironic huh ). So much of mainstream media was actually started by bankers.

If they do quality journalism then so be it, but they are mainstream/state enterprises. Not independent ones.

Just to be clear. The ICIJ is not a state enterprise. In fairness you said mainstream/state but mainstream is a meaningless term in my experience. It is what it is. Their about page gives more details.

I'd also add The Intercept.

U.S. monitoring of the global flow of money is frankly terrifying. U.S. law enforcement is currently politicized to an extreme degree, and the extent to which the U.S. continues in the near future to be a democracy under something vaguely like the rule of law is in severe question. One of the scariest things to think about in contemplating the possibility of having to flee this country in some point in the next few years if it goes full authoritarian is being instantly impoverished to the point of not even being able to buy gas to get to the Canadian border on the flip of a switch of some faceless bureaucrat.

(And no, I don't think cryptocurrencies are the answer---wildly fluctuating value and seemingly endless security problems hardly create a sense of safety.)

Crypto may not be the answer, but some a couple thousand in precious metals, diamonds, and crypto could find a nice home in your bugout bag.

What situation are you imagining where any of those things would have practical use?

I'm imagining it being pretty easy to track down the dude who keeps buying things with diamonds.

The valuables would cover a few months of rent in whichever area you end up.

Why not moisannite?

Why that?

One of biggest deterrence for me to working in US is a prospect of becoming a US taxpayer for life upon touching a US bank account, or a US originating income source.

You'd have to file taxes, but won't necessarily owe any.

Large companies will continue doing illegal things while reward outweighs the risk. This reminds me of pharmacy distributors that contributed to the opioid epidemic. They continue operating even when they were told not because there was no real punishment in place, and the only thing that stopped them eventually was a criminal indictment [1].

Fines do not work, because like the OP article states, the shareholders end up paying up, not the executives who let these things happen. If we want to curb this behavior, we need to do one of 4 things:

1. Criminal indictments for executives and/or the company instead of fines for breaking the law

2. Fine executives severely, to the point of bankrupcy, on top of fining the company

3. Significantly increase the fines against the company, maybe a magnitude of 100-1000x, to the point where breaking the law flagrantly may result in bankruptcy or dissolution of the company. A fine should not just be "cost of doing business"

4. Prevent the company from doing business in an area where they broke the law. E.g - if they launder money illegally for a Ukranian businessman, forbid them from doing any business in Ukraine for several years. This one is more nebulous and may not work effectively for banks. Worked for shutting down opioid distribution for certain localities[2].

[1] https://www.npr.org/2019/04/23/716571375/drug-distributor-an...


You advocate terrible policy.

Someone sets up a bank to serve their community, taking investors from all over your area. They take deposits, make loans to help the community grow. The management team is great at training staff to follow all banking regulations. The bank grows to hundreds of branches.

Then one branch manager is bribed by a criminal to subvert banking regs and the internal control systems, so they can launder millions of dollars.

You would prosecute the CEO for unknowingly employing a criminal? Or senior execs for unknowingly having security holes a clever employee could buy pass (when all control systems can be bypassed by clever employees)? You’d increase fines to bankrupt the Company and wipe out investors investment fir the crime of hiring an honest CEO and execs who got fooled by one bad Apple?

Intent matters.

A one off situation like you describe can be limited to punishing the particular branch manager. However, banks like Deustche and JPMorgan, who seem to be having these issues nonstop with regularity, are clearly run to allow these kinds of criminals to actively participate in their banking structure with minimal oversight, hence the responsibility resting on the higher-ups.

Again no monitoring system is perfect or unbreakable. Large banks are going to seem more like they “allow” this simply because they have 10x-100x more employees.

The solution to people laundering funds from selling marijuana isn’t punitive banking regulation, its legalizing marijuana. The solution to Dictators stealing from their citizens isn’t onerous banking regs on the 99.9% of honest clients, it’s removing Dictators from power.

> removing Dictators from power

One way to remove dictators from power is to disrupt their money flows, so tighter banking regulations to prevent fraud and money laundering.

> simply because they have 10x-100x more employees

There are plenty of large banks who do not have this issue. Considering Deustche on its own has had more sketchy money than pretty much all other banks combined (according to the article) speaks volumes.

Please name a single dictator removed from power using banking regulations.

Then explain why the banking system is used against Dictators who still have voting rights in the UN.

Maybe if we had better systems in place to prevent fraud and laundering, we could do better. Banking regulations are preferrable to the other means we have of removing dictators from power: war, old age, violent revolutions.

You just said not removing dictators is preferable to removing them, since all financial regulations can be evaded by dictators. You can’t name a single dictator brought down by financial regulations.

And bloody war and revolution is preferable to inaction, because every day is bloody under tyranny. Averting your eyes doesn’t stop tyrants from killing and oppressing their people.

How do you remove a dictator from power without invading that country?

Imagine managing a nuclear facility.

One of your employee is bribed to open the valves and a whole region is flooded in nuclear waste.

Would you argue that the higher up managing that facility have nothing to be blamed for, because it was just a rogue employee’s issue ? What are they even managing, if they can’t make sure to have an healthy and working organization ?

How often do you ride your straw horse?

No one is saying management has no responsibility. It’s saying they should be judged on whether they put reasonable controls in and used reasonable efforts to ensure they are followed.

The point is on “reasonable”.

We are so far away from any reasonable efforts that we’d need to put pretty drastic punishments to even have a chance to tip the balance on the “too much” side.

In particular in the current situation we are talking about rampant criminal behavior, it seems weird to me to go “don’t tap too hard on their fingers, they are doing all their best, sending memos every quarter to absolutely not make money though unethical ways”

What “rampant” criminal behavior?

Do you currently see banks as a bastion of straightness and uncorrupted values ?

We have scandals after scandals for as long as I can remember, from the pettiest levels (opening sub accounts without telling clients to meet sales figures, blacklisting bankers from the whole profession when they dare refusing to play along) to nation wide crisis inducing levels.

The point of this article should be that SARS are filed often for things that aren’t criminal, mostly for things that aren’t criminal. So where is all that crime?

Again, the only specific crime you’ve listed is the Wells Fargo commission scam committed by mid level employees to up their compensation. They didn’t steal anything or kill anyone, they created some extra accounts to look good in review.

Well, the CEO get’s paid life-changing money for that position, sure there should be some life-changing liability

Would you take a job paying $10M a year if you will spend the rest of your life in prison if a single one of your ten thousand employees commits a felony?

Then maybe we should check whether the existence of entities capable of paying such amounts tot the executive is a sustainable way to have a business?

Yes absolutely.

This sort of regulatory response has already caused a problem: as a 100% legitimate business, you can already get totally cut off from all banking services if something about you feels potentially dangerous to back-office staff isolated from anyone you can talk to.

I'm not sure if this system of reporting is good or even well intentioned, or if it might be overly authoritarian as some replies here seem to think.

However, what's being argued is clearly not just that banks are diligently flagging transactions only to be ignored by law enforcement.

> They [the leaked files] show banks blindly moving cash through their accounts for people they can’t identify, failing to report transactions with all the hallmarks of money laundering until years after the fact, even doing business with clients enmeshed in financial frauds and public corruption scandals.

> Authorities in the U.S., who play a leading role in the global battle against money laundering, have ordered big banks to reform their practices, fined them hundreds of millions and even billions of dollars, and held threats of criminal charges over them as part of so-called deferred prosecution agreements.

> A 16-month investigation by ICIJ and its reporting partners shows that these headline-making tactics haven’t worked. Big banks continue to play a central role in moving money tied to corruption, fraud, organized crime and terrorism.


> They [the leaked files] show banks blindly moving cash through their accounts for people they can’t identify,

This doesn't seem like a solvable problem in practice. In theory KYC laws require them to know who the customer is, but what does that even mean? The shell corporation whose sole purpose is to be listed as the customer of the bank? The straw man with no ties to the underlying organization who received a bag of cash to be listed as that corporation's executive?

All KYC laws really do is harass innocent people who have trouble meeting their requirements. The people moving large sums illicitly can work around it by paying a fixed amount to do these kinds of shell games, which the ordinary people dealing with ordinary sums of money can't afford but the big time criminals can.

> failing to report transactions with all the hallmarks of money laundering until years after the fact

This sounds more like garden variety bureaucratic incompetence than some kind of malicious activity. After all, if they were actually in cahoots with the bad guys, they'd have advised them how to make their transactions not have "all the hallmarks of money laundering" to begin with.

Also, a lot of perfectly legitimate transactions have "all the hallmarks of money laundering" because money laundering is, by definition, designed to look like a lot of perfectly legitimate transactions.

> even doing business with clients enmeshed in financial frauds and public corruption scandals

How is that not what they're supposed to do? To do otherwise would be to presume guilt rather than innocence. Imagine you get falsely accused of some kind of fraudulent activity and while you're busy proving your innocence in court, you get evicted from your house and have your car repossessed because no bank will allow you to make your loan payments while "enmeshed" in those false accusations.

> This sounds more like garden variety bureaucratic incompetence than some kind of malicious activity. After all, if they were actually in cahoots with the bad guys, they'd have advised them how to make their transactions not have "all the hallmarks of money laundering" to begin with.

They don't need to do even that to begin with, they only need to pay to open a bank once. And polities like Cyprus, British dependent territories, Eastern Europe keep setting records for the number of banks per capita.

This sounds like the system is working as intended. Banks are encouraged to report suspicious activity, and are encouraged to take a fee on the transactions they report as suspicious. This gives the government the info it needs to engage in prosecution and gives the banks a financial motivation to report the suspicious transactions. The report makes this obvious legislatively driven outcome sound like some sort of evil-doing complicity with villains on the part of the banks. Is there something more deeply malicious on the bank's part here than simply behaving in the way anyone reading the legislation would expect them to behave?

From https://www.bbc.co.uk/news/uk-54225572 :

« By law, they have to know who their clients are - it's not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash. »

If that's true, I don't think the banks are simply behaving in the way anyone reading the legislation would expect them to behave.

Banks have the power to stop obvious money laundering by shady characters by denying the transaction, instead they look the other way, send a report and collect a fee.

which could be ideal if the government is trying to build a larger case. It is strategically murky to give banks the power to deny.

Banks have the power to deny transactions unilaterally already.

If it's the intentional effect of legislation, does that mean it's above reproach?

Terrible example of “muck raking” where the authors paint a wide range of different people with the same brush, while entirely neglecting the massive negative consequences of these regulations.

Trying to turn the financial system into a group of cops with unlimited powers to seize your assets without trial, or even being required to disclose to the account holder why is terrible policy.

Conspiracy Theory time: The US of A is striking on big international banks to monopolize the international and offshore banking sector.

As of right now, it's pretty much impossible to open a bank account anywhere in the world without being a resident in said country. There is also FATCA and FinCen which reports to America. There are also strict KYC/AML rules for opening an account and transferring funds. The Swiss "bank account" is no longer a thing. Except for the big guys who, until now, still enjoy a nice playground. But these times might be coming to an end.

Compare this to the US: You can open a bank account easily, with no documentation, and it doesn't really take that much. At least for me, it worked from the first bank. Documentation? Just your passport. US address? You can use any address and you don't need to live there. Unsecured Credit Card? Yep, and if you pay up your balance monthly they'll increase your credit limit without asking. Trading stocks? No probs, just fill your taxes. Crypto? It's also okay with several US banks.

I personally know one person who just moved to the US, made a transfer of $250k from an HSBC account in a foreign middle-east country and WF didn't ask any questions. Compare this to the EU where Paysera recently froze my account because I made a 1.000euro transfer.

My experience is the same in EU. If you or your company is not a resident in the country then the bank will just not want to have anything to do with you "because of too much FATCA paperwork and other requirements by US". I wonder how much this weighs down EU companies as there is no real competition in the banking industry across countries and you are kinda limited to what banks in your country offer you while still competing in the same EU market. And the disadvantage is probably even higher compared to entities with US banking.

It's funny how people often cite the EU banking system as more advanced than the US because it has instant SEPA transfers. From my experience the EU banking infrastructure is both a joke and a pain in the ass compared to the US.

And yes indeed, the EU doesn't want you as a client unless you live next to the branch.

From my experience in France everything was very bureaucratic. A few examples: If you need to see someone clerks from the bank don't know how to do anything and so any slightly complex operation they would need to call someone from a call center who knew how to deal with it. And usually you needed to take an appointment at least one week in advanced to see a counselor. You also can not go to any bank office to manage your accounts, you need to be registered in a particular bureau and if you needed to do anything you can only do it at this particular bureau. Everything requires a lot of negotiation and guiding bureaucrats. Most of the user service its done through the phone and you need to pay for the call.

Ok. What's your experience?

How did you open a bank account in the US (esp. as a foreigner) without having to show at least the passport and valid visa? In my experience helping a couple of fresh/new immigrants (on student visa) get their bank accounts opened recently at Chase, it's much tougher than what you are describing. I wonder if what you said is not longer true.

I myself even had to call both Citi and Capital One to verify my legal residency status to them for having their credit cards. Banks in the US are catching up to this it seems.

Your friend who moved 250K from HSBC to WF, I wouldn't be surprised if s/he is now being monitored by the US intelligence.

> How did you open a bank account in the US (esp. as a foreigner) without having to show at least the passport and valid visa?

If you re-read my comment you'll see that I mentioned that they only ask for my passport. This was, roughly, 1.5 years ago.

> In my experience helping a couple of fresh/new immigrants (on student visa) get their bank accounts opened recently at Chase

I don't know much about banking in the US but enough to not go to Chase or Citi. Try TD Bank. Also, I think it's more about the branch than the bank itself; so I might just have lucked out from a first attempt.

> I myself even had to call both Citi and Capital One to verify my legal residency status to them for having their credit cards.

When I signed up, the agent told me that I can't have unsecured cards without an SSN or an ITIN from the US embassy in my country. But then they released the funds, so not sure what happened in between.

> Your friend who moved 250K from HSBC to WF, I wouldn't be surprised if s/he is now being monitored by the US intelligence.

Nope. That's not really how intelligence works. Also he's pretty legit, it's just that he opened and transferred funds before settling in the US which should have made him suspicious at the time. It was two years ago and he has been employed since with a good job/status.

There is definitely something off about this article's timing. It is clearly designed to create outrage and contains weird factual errors about SARs, PEPs, and BSA in general.

Granted, a lot of this stuff is not common knowledge partly due to associated secrecy, partly due to most of it happening behind scenes, but the actual law and interpretations are on the books and not secret, so it is hard for me not to judge it more harshly.

So what does that mean? Article is purposefully trying to sound more clickbaity than necessary to sell the story.

For the record, there are some real issues with SARs and BSA, but the article mentioned none of them.

> The Swiss "bank account" is no longer a thing. Except for the big guys who, until now, still enjoy a nice playground. But these times might be coming to an end.

It's now called "crypto". Bitcoin/altcoins may go up in value dramatically as banks crack down on financial crime.

This all makes for good press, but it's rather naive about how the global banking system works. If it were possible to decompose the flow of capital between nations into its purposes, avoidance of taxes and regulations would outweigh all other purposes 2:1. Most of this activity is viewed as legal. The only barrier to moving capital out of any tax/regulatory regime is the overhead you are capable of spending to do it and that's the only way it can be without a drastically different system of international governance.

One can always perform infrastructure spending, if the needs are great. My favorite example is the island of Seipan, which was used over the last 20 years to expatriate billions and billions of dollars from China into the US. https://www.bloomberg.com/news/videos/2020-04-15/how-a-chine...

There isn't really any international enforcement body or oversight besides whenever there is outrage in the US/Europe. On paper banks doing business with US banks must extend the US enforcement regime, but there isn't really any system to ensure that's the case, and the US laws are already weak. These news stories cannot change this reality, and there's really nothing mysterious or hidden about how these funds transfers work.

It is very hard to open your first bank account in the UK as an immigrant due to AML regulations(They require proof of address, it creates a catch 22 situation). The joke goes that you need to be a drug dealer or a warlord to easily open a bank account in the UK. Maybe it was not all jokes after all.

A few years ago I was able to:

1) submit an online application for a bank account,

2) receive, to the address put in the online form, a rejection letter (due to, I think, lack of proof of address and/or credit history),

3) use that letter as a proof of address to open an account in another bank.

I met someone who was riding the busses and the tube for free until he got caught so he can use the fine letter as proof of address. I don't know if he succeeded but I think the country you are from also matters, there was a French girl who managed to get her account using an Amazon shipment.

Rent contracts don't work unless the renter is a some giant institution. GSM package shipment would't work(people tried GiffGaff envelopes). A letter from the employer works only if the employer is a large institution(Virgin would work, McDonalds would work, a small company with 5-10 employees may work if the banker had good sex last night, smaller companies unlikely to work). The first company I worked for was a small one and got like 10 letters from them and went around branches and one branch finally accepted the letter. I think it was around Christmas and the employee was in a festive mood that day.

That said, I think the situation is easier these days thanks to Monzo or Revolut.

This is also true in Germany (to rent a place you need a bank account, but to get a bank account you need a registered address). You almost always will need a 3rd party to help you. In my case my employer rented an apartment, and then had someone register me there, which required me assigning limited power of attorney. Then I opened a bank account with that address, and the cycle was broken. Note that this also requires a work and residence permit, which is usually going to be a blue card, which is a whole other ball of wax. So, yeah, its hard, but not impossible.

Same in Norway. The purpose is to put the deposit into an interest bearing account in both the name of tenant and the landlord to prevent the deposit from being stolen. Unfortunately, this catch-22 presents an undue hardship for new immigrants looking for either a place to live or a bank account. Reasonable landlords will hold the deposit in cash and give a receipt until the bank account can be obtained, but this is not strictly legal.

I'm pretty sure you can use cash deposits at a bank to pay rent. My land lords in Germany have never asked for proof of bank account, they just provided their account details and asked me to set up recurrent payments. Not every bank offers it, and it's costly (5-20€ afaik), but it works.

If you have a bank account in another country, that'll work as well, you just need a way to transfer money to accounts, as few land lords will accept cash payments.

Same for exchange students in France. Usually they get buddied up with someone to register at their address to get a bank account if they'll be there longer term and need their own lease.

The authors of this article haven’t considered how these ridiculous regulations affect the poor, or the innocent who have had accounts seized with little recourse.

These kinds of rules are insane.

It implies the government/bank cannot legitimately determine your status.

It's a mind-boggling level of bureaucratic incompetency.

You should get some kind of 'citizen number' from the government, then, the government allows certain 'highly regulated organizations' to 'check on status for specific reasons.

You go to the bank/wireless carrier, show your ID with citizen number and 'prove it's you' - the bank has permission to request your 'status' from the government at that time (i.e. 'landed immigrant' 'citizen' 'diplomat') and makes their own business decisions.

Easy peasy.

Same thing for insurance, healthcare, social benefits etc..

In the UK there's no concept if national ID and national ID card(There's an NI number for social security stuff but that's different). There's no central registry of citizens addresses and such, at least officially.

It certainly makes some things harder but I respect the spirit of the way British approach these things. Once you are in, it feels like the government minds its own business and doesn't have to know everything you do. I also think that this fosters the free thinking and innovation that UK is a leader of.

Even though I get what you are saying, I think this might be a post-romanticization of it all. Same with 'no constitution'.

It just so happens that Napoleon never made it across the channel, and you never really had 'your own Napoleon' and so all of the 'ancient systems' remained - sometimes for the better, sometimes for the worse.

Aside from the Biblically dystopian echoes of the 'each shall bear a mark which will be required to do commerce' of Revelations, which in all seriousness is a pretty insightful hint at what very well would provide the means for a totalitarian apparatus to control us all ...

... the benefits of some kind of 'national id' are just tremendous and we all need to think about this.

'Lack of ID' is a 'root cause' in everything from gun registry, to healthcare, to immigration, to financial fraud, to benefits fraud etc..

At least the gov. should provide a 'Google-like Single Sign' on for official use.

The Canadian government is now defaulting to banks, god forbid billions of dollars in IT can't produce 'a login'.

All money is dirty.

Most people don't question the provenance of their money, but every bill in your wallet contains trace amounts of cocaine. Every dollar you have has been involved in some sort of grey or black market transaction. Your money has also been used to fund an enormous amount of legally sanctioned atrocities around the world. You're not a bad person for accepting it. The money itself is amoral.

When people talk about cracking down on "tainted dollars", they're really talking about power. In 1970, Richard Nixon signed the Bank Secrecy Act and turned money into a system of control, the system of control that attempts to use money as a political tool in order to control who is able to send and receive it, who they are able to send money to, and to have complete surveillance of all financial transactions.

Your money isn't really yours if an authoritarian leader can dictate how you can spend it or seize it at any time. Andreas Antonopoulos is a good person to listen to on this topic. https://www.youtube.com/watch?v=FyK4P7ZdOK8

I'm always sad to see people cheering this stuff on. Every time I hear someone cheering on some oligarch who got exposed doing shell corporation stuff in offshore jurisdictions (Panama Papers, etc), I die a little inside.

Since 2001, we've seen drastic expansions in mass surveillance. Even if these are bad people, you wouldn't see these articles cheering on FBI employees who "cracked secret darknet encryption to catch criminals, pedophiles, and terrorists".

In my view, the banks' actions are morally justified. The KYC regulations everyday people are subject to when going about their business is overbearing, and we should fight back against it. The police should investigate crimes, and banks should do banking. Banks shouldn't be government surrogates.

Fining a bank a tiny percentage of their take from criminal activity is completely pointless. In fact it's arguably an example of regulatory capture. Serious enforcement of laws means putting lawbreakers in prison, like we did with the S&L scandal back in the '80s. Bill Black[1] was a hero.

[1] https://en.wikipedia.org/wiki/William_K._Black

Background information and overview on the problem of illicit financial flows [1,2,3,4,5] - one of the key related issues. Deficient enforcement by public agencies in industrialized countries and lack of ethical behavior by intermediaries like banks enable theft, organized crime and worse. You can always complain about the use of exaggeration in media articles but the issues and consequences for many people are very real and not to be trifled with.

[1] https://en.wikipedia.org/wiki/Illicit_financial_flows [2] https://gfintegrity.org/issue/illicit-financial-flows/ [3] https://journals.openedition.org/poldev/1863 [4] https://carnegieendowment.org/2018/10/11/security-dimensions... [5] https://iff.taxjustice.net/#/

At least they've caught the leaker, https://en.wikipedia.org/wiki/Natalie_Edwards, and is in the process of punishing her.

So even if curtailing dirty money in our financial system does not seem to be on the agenda. They are doing something about reporting about it.

From reading about drug cartels, especially in Mexico, one thing I saw a few times was some variant of the following:

An international bank opens a new branch in Mexico City. After everyone is settled in, one day the manager of the bank has an appointment with a new client. The client enters and hands the manager photographs of the manager’s spouse and children, all taken an hour ago at school or home. They then make it clear the manager will be receiving lots of cash which will make his numbers look fantastic, but obviously if that cash is questioned, well, the manager does’t want to see what happens.

This seems like a difficult thing to deal with.

what are the consequences of _not_ questioning the money? can the managers boss force him to? in which cause he would have to lie and potentially falsify documents?

> Global banks defy U.S. crackdowns by serving oligarchs, criminals and terrorists

Translation: Global banks defy U.S. by not just serving its own allied oligarchs, criminals, and "freedom fighters" but also those tied to other countries

E.g. Bezos, or Carlos Slim, or some e.g. Saudi royalty sawing journalists, or even someone like Pinochet, or terrible African right-wing dictators? Good. But it's bad if you're a rich person (shady or not) from a foreign country that's not bending over backwards.

I don't understand how Paul Manafort resigning makes him someone U.S. banks should not do business with. Some "criminals" are so small and so insignificant, but U.S. financial laws like the one being used in this article will drastically ruin the lives of these people.

Further, like others said, these financial laws do not allow the prosperity of those marginalized or who never entered the financial globalization system.


What in the world? You do know Manafort was being paid millions of dollars in laundered money by the dictator who was overthrown in the “coup” right?


And then they turn and say Bitcoin can be used to launder money.

correct, it is same thing but just that circumvents their own network so they can't collect fees and have the power it gives them to control the network of global money supply

I mean this is like common operations for HSBC. They did this for the cartels just a couple of years ago. A little fine and it's back to business as normal. Until CEO's and actual people go to jail this will keep happening. The profits are just too good.

It seems like some of the comments are actually ok with the morals of this. There is another article right above the video titled: "Unchecked by global banks, dirty cash destroys dreams and lives." I guess we are all a bit numb unless it gets personal.

As a person who has to file with FinCEN most years, I beg you all not to jump to the conclusion that you should make foreign bank accounts more onerous than they already are. I think the reporting is about as good as you could hope. My U.S. bank accounts don't oblige me to report to the Canadian government, it is already quite a bit file with FinCEN, I have to get all of my momentary balances and the corresponding exchange rates and tell them the peak.

If you are interested in catching these things more often, it is likely possible to do so with the existing records and reporting requirements.

and an avg guy has to do KYC and what not to move $100...

some of those min. threshold numbers ($10,000) that invoke financial reports are 30-40 years old so not inflation adjusted. So now those are basically surveillance tools on the lives of masses for no real purpose but instead become attack vectors.

>"For some financial institutions, the problem client is another bank."

The entire global financial system -- exists outside of the jurisdiction of one central government or investigative authority.

Opinion (and this is only one man's opinion):

I believe the entire global financial system must (in the future or far future) become transparent from top to bottom -- with the ability for any citizen of the world to observe any transaction made by any fellow citizen the world in realtime.

The world will not change (and everything in this article will just recur again and again, but with different actors) unless this happens.

Yes, I realize that this is a minority opinion.

Yes, I realize that 99% of people living on the earth at this point in time would disagree with me.

Yes, I realize there would be huge technical challenges and obstacles with implementing this.

Yes, I realize that it could not be done overnight, that it might take many years or even a lifetime, for various reasons.

And yes, I realize I will probably be attacked by many for this opinion.

But nonetheless, that's my opinion.

History will always repeat itself unless we learn from it.

These problems will recur again and again in the future -- just with different actors and different banks...

These problems have recurred historically -- just with different actors and different banks...

For people interested about how and why banks deal with criminals, the best book I know is this: "Hot Money and the Politics of Debt", by R. Naylor.

The problem is not that fraudsters can move money too easily... The problem is that there are too many fraudsters to begin with. Our global monetary system is itself a fraud; so it's logical that the people who would be most likely to accumulate a lot of money in such a system are fraudsters. Don't be surprised when that dirty money starts moving around!

Money will keep moving, whether it's dirty or not.

Here is another one with Danske Bank's money laundering case. It seems there is fresh development on the case:

https://finans.dk/erhverv/ECE12426633/medier-haardkogte-krim... (use google translate, Danish to English is pretty much spot on)

As for the how to prevent this, as many have stated, punishment should fit the crime and it should work as prevention to people who wield extraordinary amounts of power. If the crime is "to knowingly and deliberately, for the sake of acquiring wealth, empower a criminal or terorist organization by using one of the societies (or economies) most important institutions" then the punishment should definitely fit the crime and I think we all know what it needs to be.

It's worth nothing that the ICIJ uses some pretty neat tooling to analyze data like this. They've now developed their own platform called Datashare[0] for analyzing documents that includes functionality like entity extraction via NLP.

They also make heavy use of the Neo4j graph database and graph visualization tools since data like this is highly connected.[1]

Since this data was released publicly you can explore it via Neo4j here: https://github.com/jexp/fincen

[0]: https://datashare.icij.org/

[1]: https://www.icij.org/investigations/fincen-files/mining-sars...

Some of the methodology in this article seems flawed. e.g. They rank banks by the total value of suspicious activity reports (SARs) each has filed, and infer higher amounts as evidence of broken AML.

I don't dispute the underlying accusations, but one could also argue SAR filings are a signal of compliance (at least compared to other banks that have undergone less scrutiny in the past and might be less vigilant in their reporting). Neither do I see any attempt to normalize the data (e.g. by number of customers).

This article in The Atlantic from early 2013 was insightful (and freightening). Its headline is slightly misleading as the loop holes and concepts in the US system are not limited to Russians.

"Russian-Style Kleptocracy Is Infiltrating America"


Qouting "documents identify more than $2 trillion in transactions between 1999 and 2017 that were flagged by financial institutions’ internal compliance officers as possible money laundering or other criminal activity — including $514 billion at JPMorgan and $1.3 trillion at Deutsche Bank."

So what's the claim here? banks should have not wired money or the doj looked the other way and did nothing when there was suggestion of fraud?

"Suspicious" is the keyword here. They are being filed on some predefined set of patterns.

In some cases, a crime is being committed, but in others its just false positives. There are probably more false positive than anything.

As long as banks are filing SARS and crossing their i's and dotting their t's they are following the laws and regulations.

Also related: North Korea launders money through US banks to avoid sanctions.


Global banks might, but smaller regional ones close or sell businesses, exit markets an pay fines. A banking executive recently committed suicide as he was left to be responsible after his subordinates were found guilty of money laundering and the head office pushed him under the bus.

Not sure what point you're trying to make here - it sucks that this individual committed suicide but it seems correct and appropriate for a manager to be held responsible for the actions of their reports.

If you are a police chief, and one of your cops takes a bribe, it does not imply your complicity.

Is dark money like this somehow more lucrative for banks than just regular, say, business banking money?

No necessarily, but there's quite a bit of it sloshing about and if one can get a piece of the action, and the associated fees, it is profitable. Deutsch Bank did quite a bit of it it appears:

* https://www.theguardian.com/business/2020/feb/16/dark-towers...

See also many banks in Cyprus and their association with Russian oligarchs.

* https://www.theatlantic.com/business/archive/2013/03/everyth...

* https://www.bbc.com/news/business-21831943

Supposedly toned done in recent years:

* https://www.bnnbloomberg.ca/cyprus-loses-luster-as-mediterra...

Criminals deal with hard money and liquid assets, while most people have money invested in businesses and real estate. They also don't complain about big fees. So it is advantageous for banks to work with dark money.

There's a strong culture in banking - not universal, but strong - that regulations are just a game being played between your institution and the regulators. A banker who steps just to the edge of being slapped down by regulators is seen as a much more positive figure than a restauranteur who just barely passes the health inspection or a loan shark who charges exactly the maximum allowed.

Because regulations are wrong headed and injurious to honest customers.

My guess is that the amounts are large, and there would be less complaints from the participants if the bank holds on to the money longer to maximize their vig. Of course, there could be some off-the-books incentives for deal-makers at the banks.

Compared to alternatives, high fees are better than being unbanked. Like payment gateways that let you sell THC.

According to the article, banks were indeed able to command higher premiums/margins on cash flows subverting Iranian sanctions.

Bribes to top management? Criminal organizations infiltrating banks?

Until CEOs face jailtime even after their departure from the company this will not change. Corporations and LLCs lack social accountability comparable to the accountability private citizens have.

What Bank CEO explicitly approved braking banking regulations?

That's a bit too easy, responsibility of a leader shouldn't end at "nobody asked me for permission". (Where exactly to draw the line and how to decide penalties is of course a giant can of worms, it also doesn't really make sense to harshly punish executives for everything that happens downstream of them. I do not want to imply that there is a simple answer to this)

”I didn’t know I was breaking the law” is not a valid excuse for a private person and it shouldn’t be for an executive either. A company big enough that the execs don’t know about day-to-day operations should have processes in place that would notify them if something illegal was going on.

That’s like saying parents should be arrested for their children’s crimes. The only systems in place that can notify CEOs or parents of all illegal events in their organizations exist only in fantasyland.

And ignorance of the law should be an excuse, when the US has so many laws on the books that nearly every adult is guilty of committing at least one felony unknowingly.


Indeed, why do you have such weirdly conflicting opinions? Or are you somehow not "HN", but everyone else is one uniform mass without individual opinions?

it's perfectly consistent. punishment should be proportional to the scale of crime. laundering money is a bigger crime than stealing chewing gum, as it affects way more people. the restitution is harder and the responsibility greater. greater breaches of trust should result in greater punishments. white collar crimes are always bigger and broader than blue collar crimes.

bankrupting an executive means downsizing the house and car and laying low for a bit, not being made homeless with dim prospects for the future as happens with the lower classes.

Bold of you to assume all readers are American. Unless you put forth something other than strawmen I’ll choose not to reply.

Depressing to think that the kind of oversight which was exercised in BCCI's case, going so far as to shut the bank down entirely, seems almost impossible in this day and age.

Yeah and I love the movie adapted.

Didn't know there was a movie! I'll have to check it out.

So how is cryptocurrency supposed to improve this problem?

It doesn't.

But it's worth noting that an argument against cryptocurrencies is that it would give criminals and others free reign as there would be no built-in checks to prevent them. Yet as we see these checks are ineffective, weakening the argument against cryptocurrencies.

"Yet as we see these checks are ineffective"

? They are highly effective.

It would be like saying 'police are ineffective in suppressing crime' when without them, the streets would explode with crime within a few days.

Everything (your bank account, your pay pal, your stripe, your accountant, your financial advisor) is monitored because without it it would be a hey day for financial corruption, money laundering etc..

> It would be like saying 'police are ineffective in suppressing crime' when without them, the streets would explode with crime within a few days.

Or like saying my rain dance doesn't actually make it rain although if I stopped dancing, the world would be a desert.

? These comments about not understanding the nature of policing are so bizarre it's hard to understand the pop psychology in effect here.

I think either young people, or a certain kind of person, for some reason develops an odd intuition for what people are, how people behave, what civilization actually is.

Most people behave fairly well, largely because we're socialized strongly into that. But the moment that the rules are lifted - literally that moment - then 5% of us take advantage of that and that's all it takes for chaos.

If the government announced 'no policing' then most banks and stores would be robbed immediately. At least 20% of would just 'go with the chaos' seeing 'free stuff to be had, sucker to wait around' and anything not protected would be looted. There would be violent standoffs between people hired to protect stuff and people wanting to steal.

That chaos would descend very quickly into regular social life, people hurting each other out of revenge, vendetta, traffic rage etc.. The 'psychopaths' violence would very quickly escalate way outside their circles.

We have the social experiment already, in 1969 Montreal (generally very peaceful, very few guns etc.) went on strike and within hours the city was in chaos.

Here is Stephen Pinker's personal recollection as he was a young idealistic man then:

“As a young teenager in proudly peaceable Canada during the romantic 1960s, I was a true believer in Bakunin’s anarchism. I laughed off my parents’ argument that if the government ever laid down its arms all hell would break loose. Our competing predictions were put to the test at 8:00 a.m. on October 7, 1969, when the Montreal police went on strike. By 11:20 am, the first bank was robbed. By noon, most of the downtown stores were closed because of looting. Within a few more hours, taxi drivers burned down the garage of a limousine service that competed with them for airport customers, a rooftop sniper killed a provincial police officer, rioters broke into several hotels and restaurants, and a doctor slew a burglar in his suburban home. By the end of the day, six banks had been robbed, a hundred shops had been looted, twelve fires had been set, forty carloads of storefront glass had been broken, and three million dollars in property damage had been inflicted, before city authorities had to call in the army and, of course, the Mounties to restore order. This decisive empirical test left my politics in tatters (and offered a foretaste of life as a scientist).” [1]

If one takes a moment to think about it, it's so obvious though, what's 'interesting' about it is why people would think the result would be too far away from this one way or another.

Anyhow: there are tons of regulations at every level of banking, and that's why you don't see financial fraud on every corner.

[1] Pinker, Steven (2003). The Blank Slate. Penguin Books. p. 285. ISBN 0-14-200334-4.

Cryptocurrencies aren’t subject to counterproductive regulation. Anyone who has had an account balance locked up by PayPal or their bank for bogus or unexplained reasons will appreciate this.

It's good to know which banks will be willing to accept my sizable money transfer in case the authorities are after me.

The issue is that the restrictions imposed by the US government on banks are so constraining that many countries with a lot of corruption would just be cut out of the whole world banking system. This would be a death sentence for these countries as most of them are doing poorly already economically.

In addition, it's not like the US itself is without corruption but because they're the one who make the rules, they don't apply to their own corrupt entities...

It’s hard to take the US seriously until they clean house:


The book Dark Towers on Deutsche Bank is enlightening on how many employees there ignored many "mandatory" checks and 'know-your-customer' provisions:

* https://www.theguardian.com/business/2020/feb/16/dark-towers...

DB ended up being the only 'mainstream' bank that'd deal with Donald Trump and family.

aside from BCCI mentioned by another commentor please also Google Michele Sindona and the Vatican bank.

I didn’t find this as scandalous as its being made out to be. Money laundering is a well known issue.

Can someone please go to prison this time, and I mean a CEO not some mid level fall guy.

Which CEO? And for what? The crime of not knowing mid level employees were bribed to subvert regulations?

how many people went to prison as a consequence of the Panama Papers, Bermuda Leaks, Offshore Leaks, and the recent DOSSecrets leaks of UK territory money laundering banks?

zero. no, wait, one 71 year old guy who evaded taxes by naming his 93 year old mother as the owner of his offshore shell companies did get indicted by DOJ for tax evasion on an amount of income less than $5 million.

i have zero faith in The Powers That Be in our legal system to ever systematically hunt down and crush the multi-trillion dollar shadow economy. DOJ are as good as being the protectors of the Int'l Financial Mafia Syndicates. sadly, i used to hope more vigilante hackers like Phineas Phisher breaching and leaking and doxxing these Shadow Economy overloards would solve the problem. In many ways, hacking made it worse because now the Shadow Economy is spending money to better conceal itself and to embed itself into the crevices of the legit economy to become more untouchable.

i am especially skeptical of ICIJ because they are funded by George Soros' Open Society, which means maybe Soros is paying ICIJ to cover things up and stall for time and provide a soft landing to Int'l Financial criminals.





Would you please stop posting flamebait to HN? We ban accounts that do that because it wrecks the site for the kind of conversation we want to be having here.


you can just ban me or delete my account.

Sure, but I'd rather persuade you that it's not in your interest to post like that, the same way it's not in your interest to litter in a city park or spill oil in a lake.

There's nothing wrong in principle with what you posted. It's just that it's the sort of thing that only really works in a smaller group where people have some pre-existing connection to each other. If you do it here, it just leads to misunderstanding and overreaction. Even if 99.99% of readers have no problem with it, that 0.01% is enough to take over a thread.

The HN guidelines are written to try to prevent the failure modes that tend to dominate online communities like this and eventually wreck them. It's in your interest to follow them because that's the way we get a more interesting community and more interesting discussions over the long haul.

That’s what banks are there to do

Dark Towers by David Enrich talks about this and how Deutsche Bank throughout the decades became the financier for the likes of the Nazis, Trump, and the Russians. I recommend it. https://www.goodreads.com/book/show/45730424-dark-towers?fro...

Huh, I've always thought the banks were afraid of touching money from sanctioned people because of fear of the American freeze-out: if a bank lands in the list, then American institutions (AFAIK) can't do business with them, so no money tansfers from American banks to their clients (indeed from any bank, because that bank would also be breaking the American law), and they wouldn't be able to work with VISA or MasterCard, things any bank would need to do to be successful as a bank.

But I guess nowadays these banks have even less to worry about, because the occupant of the White House is at least a corrupt twit, and at most someone helped by Putin so Putin and his friends could put their money back into the global economy without the involved handlers/recipients fearing US crackdown. ("But every word of the Mueller report was a complete hoaxed fabrication!", will come the unnuanced defense).

There could be different motives for different parties though. A bank manager who just wants some quick money and retire in a few years wouldn't care too much about long term consequences.

This seems like the US complaining about the idea that it is possible any where in the world for financial transactions to happen that it cannot completely and directly control.

I think I'm pretty ok with that. If that means that someone got to sell some cocaine in Russia I'm fine with that too.

The US, with it's 135% debt to GDP, broken politics, import everything it needs and produce nothing attitude, and multitude of more organized competitors is not the hegemonic powerhouse it was when Bretton Woods or the Petrodollar arrangements happened but it expects the same concessions as it got in those eras. I think the people who expect these privileges as a birthright are in for a rude awakening.

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