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Oops! Banks did it again

The week in corruption, 25 September 2020

Photo by Tim Trad on Unsplash

Transparency Int'l

This week’s big headline is that banks know they’re accessories to corruption but don’t really mind.

By now, you’ll have heard about the FinCEN Files investigations by BuzzFeed News, the International Consortium of Investigative Journalists and media outlets all over the world. The investigations expose major banks’ complicity in cross-border corruption, with documents showing in detail how illicit money has flowed through accounts at small and big banks all over the world.

Even if major US banks raised red flags, they processed suspect funds anyway. They often flagged payments as suspicious way too late – after scandals had broken – and many of the reports failed to properly identify clients because they were hiding behind anonymous companies.

For example, Venezuelan kleptocrats – who have looted their country for the past two decades – used EU and US banks to move billions in public money out of the country, as people back home faced the one of the gravest humanitarian crises in the world.

While banks and bankers have profited from these transactions, people everywhere suffer from underfunded public services and lose trust that things will ever change.

But change they must, and this time occasional fines and settlements will not do. The global anti-money laundering system needs an overhaul.

The FinCEN Files show only the tip of the iceberg that is the global financial system’s vulnerability to abuse by criminals and the corrupt.

Read our statement

We heavily depend on banks to detect and stop money looted from treasuries and public budgets finding safe haven abroad. The FinCEN Files are further proof that banks need to be better policed by the authorities.

Banks themselves and their senior bankers also need to face real accountability – otherwise they have little incentive to say no to dirty money.

The US clearly needs to update its toolkit for keeping dirty money out of the financial system. A bi-partisan bill that would end hidden company ownership, currently pending in Congress, needs to pass without any further delay.

Banks in 25 EU member states were also named in the FinCEN Files as the destination, transit point or origin for suspicious money.

Among them is a small Portuguese bank EuroBIC, that moved millions of suspect funds for its shareholder Isabel dos Santos of Angola. Transparency International Portugal is demanding answers from the Portuguese banking supervisor, who knew about serious flaws in EuroBIC’s anti-money laundering systems at least since 2015.

If there ever was the right time to establish an independent, EU-wide anti-money laundering supervisory body, for which we have been calling on for the past two years, it is now.

The rules of the game must change.

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