Global banks seek to contain damage over $2 trillion of suspicious transfers

HONG KONG/LONDON: Global banks faced a fresh scandal about dirty money on Monday as they sought to limit the fallout from a cache of leaked documents showing they transferred more than $2 trillion in suspect funds over nearly two decades, Reuters reported.

Britain-based HSBC, Standard Chartered and Barclays, Germany's Deutsche Bank and Commerzbank, and JPMorgan Chase & Co and Bank of New York Mellon Corp were among the lenders named in the report by the International Consortium of Investigative Journalists and based on leaked documents obtained by BuzzFeed News. While some banks said many of the transactions happened a long time ago, and they had since put robust anti-money laundering checks in place, investors were clearly worried.

HSBC and StanChart shares touched their lowest level in as much as 25 years, although they fared little worse than their peers amid a wider selloff in global stocks.

The reports were based on 2,100 leaked suspicious activity reports (SARs), covering transactions between 1999 and 2017, filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen). Banks have spent billions bolstering their anti-money laundering procedures in recent years after many faced huge fines for rule breaches. They are required to file an SAR whenever handling funds that cause grounds for suspicion of criminal activity.

But an analysis of 2,100 SARS obtained by BuzzFeed News, which worked with the International Consortium of Investigative Journalists and other media organisations, found some reports were filed months after the suspect transactions took place and that often little other follow-up action was taken.

“This brings out the point that managing financial crime risk goes beyond making SARs,” said Etelka Bogardi, a Hong Kong-based financial services partner at Norton Rose Fulbright. Shares of Deutsche Bank, which was involved in the largest number of SARs in BuzzFeed’s dossier, were down more than 8 percent at one point on Monday morning following the reports.

The bank said the issues raised were “historic”, while the German Finance Ministry said on Monday that the cases linked to Germany in the reports had already been dealt with. Many of the suspicious transactions were linked to companies incorporated in Britain or offshore British territories, prompting calls from action groups for tougher rules.