Warren called for the creation of a new unit in the US Treasury Department, separate from FinCEN, “to investigate these types of financial crimes.”
Posted on September 21, 2020, at 6:28 p.m. ET
Lawmakers, regulators, and activists across the globe Monday called for swift action into the findings of a new investigation from BuzzFeed News and the International Consortium of Investigative Journalists about corruption in the global banking system and how governments facilitate it.
In the FinCEN Files, a series of stories that began publishing Sunday, BuzzFeed News and its partners revealed how the giants of Western banking move trillions of dollars in suspicious transactions, enriching themselves and their shareholders while facilitating the actions of terrorists, kleptocrats, and drug kingpins.
Sen. Elizabeth Warren called on Monday for reforming the government practice of offering banks deferred prosecution agreements instead of real punishments when they are caught abetting money laundering, one of the problems highlighted in the series.
“We must root out this corruption by strengthening transparency of financial networks and clamp down on the dark money that flows through the global financial system,” she said.
The Massachusetts Democrat called for the creation of a new unit in the US Treasury Department, separate from FinCEN, “to investigate these types of financial crimes.”
She also called for the passage of her so-called Ending Too Big to Jail Act, legislation she introduced in 2018 that she said would hold Wall Street executives criminally accountable when the banks they lead break the law. This, she said, would stop the practice of allowing “bankers to walk away with drop in the bucket settlements and slaps on the wrist.”
Sen. Bernie Sanders also described the series as revealing “the routine business practices on Wall Street.”
“The business model of Wall Street is fraud. It is not the exception to the rule—it is the rule,” he said on Twitter. “Break them up.”
The banking lobby, however, took issue with the investigation’s findings.
“It does not make sense that the basis for media allegations that banks knowingly hid illegal activity consisted solely of Suspicious Activity Reports that those banks filed alerting law enforcement to that very activity,” said Bank Policy Institute President Greg Baer. “Clearly, there is more to this story, but unfortunately the reporting failed to unearth it, and the banks are legally prohibited from telling their side.”
The FinCEN Files series is based in part on a huge trove of government documents, called “suspicious activity reports,” which are compiled by banks and sent to the Financial Crimes Enforcement Network (FinCEN). The agency is charged with combating money laundering, terrorist financing, and other financial crimes, but BuzzFeed News found that criminals use banks to finance terror and death, and the government doesn’t stop it.
The series of stories on the FinCEN Files — which is the product of a collaboration between BuzzFeed News, ICIJ, and more than 100 partner news organizations — continue to reverberate across the world.
By Monday evening, the stock prices of several banks highlighted in the series, including Deutsche Bank, Standard Chartered, and JPMorgan Chase, had fallen. HSBC stock fell to its lowest level in 25 years. A story published Monday about that bank also revealed how it continued to facilitate and profit from transactions it suspected were dirty, including money the Treasury Department later declared was connected to narco kingpins. HSBC officials have contended that the bank met its obligations under the law.
Regulators around the world have joined Warren and Sanders in calling for investigations and stricter reforms.
In the United Kingdom, Pat McFadden, the Labor shadow economic secretary to the Treasury, said that “London’s reputation and strength as a global financial center is weakened and undermined if it is thought to be a place where illicit funds can be laundered. It is absolutely vital that the government and regulators fully investigate what has emerged.”
In Brussels, Sven Giegold, the economic and financial policy spokesperson for the Greens/European Free Alliance in the European Parliament, called the series a “wake-up call.”
“It is scandalous that large international banks continue to allow money laundering on a large scale even after the global financial crisis,” he said. “It is state failure on a grand scale that public authorities have for years shown themselves incapable of putting an end to this growing financial crime.”
Giegold said he wanted a hearing on the findings in the series in the European Parliament’s new tax subcommittee.
The superintendent of the New York State Department of Financial Services also demanded reforms. “We must act,” Linda Lacewell said on Twitter. “Trillions of dollars in dirty money gushes through the financial system in a toxic stew of criminal proceeds. Banks must put integrity at the center of what they do and empower compliance personnel to act.”
Other news organizations that BuzzFeed News shared the documents with published their own investigations, including one that found efforts by North Korea to infiltrate the global financial system and sidestep sanctions; another story looked at how the Treasury Department abandoned a major money laundering case into the illicit gold trade.