Home World News Investigation of FinCEN records leads to the new Banking Law

Investigation of FinCEN records leads to the new Banking Law


Exposing a wide range of dirty money that the world’s most powerful banks transact in the clear view of government regulators, FinCEN file The investigation has stirred the financial industry as a few stories since the Great Depression – and made strong action in the United States and beyond.

In the weeks after BuzzFeed News, the International Association of Investigative Journalists, and 108 newsrooms around the world began publishing stories based on cached secret records, the kingdom lawmakers He gave one Official investigation into British scrutiny of banks, members of the European Parliament support a stronger response across the continent, and investigations have been opened in countries from Thailand to Liberia.

Notably, the FinCEN File provided a last-ditch effort in Washington, DC, to pass a pivotal moment. new rule One of the most effective money laundering tools cited in stories: anonymous companies. The law, passed last week with overwhelming bipartisan backing, requires many secret US companies to disclose who owns them and who benefits from them.

The Corporate Transparency Act marks the most important amendment to anti-money laundering laws since the Patriot Act of 2001.

Rules The legislative package, which is part of the annual defense spending bill, also addresses many other systemic problems identified in the FinCEN Papers, demonstrating ineffectiveness of government oversight and myriad ways and banks cannot control dirty cash flows.

Among those reforms: The Justice Department will have to file annual reports justifying the use of deferred prosecution agreements – cute agreements that allow banks that violate anti-money laundering laws to avoid trial and criminal conviction. The US Treasury Department will also look for new technologies to better identify criminal cash flows and enhance communication between the private sector and federal agencies. And whistleblowers of misconduct will receive new protections.

Although President Donald Trump has vowed to veto the master bill – because it does not revoke a series of irrelevant protections on social media companies – lawmakers can override decided.

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

Sen. Ron Wyden, a ranking Democrat on the Senate Finance Committee, also mentioned the FinCEN Papers on the day the law was passed, saying: “The investigative report has shed some light on money laundering. and a solid public interest that has helped put these terms in the line. ”(Wyden supported the reforms but voted against the broader legislation for reasons unrelated to financial regulation.)

In pursuit of the FinCEN Case investigation, reporters on six continents sifted through publicly disclosed reports of suspicious activity, or SAR, from the Financial Crime Enforcement Network (FinCEN). of the US Department of Finance. SARs detailed more than $ 2 trillion of suspicious transactions almost anywhere in the world, with reporters linking cash flows with terrorist groups, drug lords and kleptocrat. The 16-month investigation has identified how the banks have helped facilitate large-scale money laundering and how national regulators have failed to crack down on criminals or hold them back.

Weeks prior to publication, the journalists working on the FinCEN File informed government leaders of their findings and requested comment. Officials in WE and the UK announced it will be changing its anti-money laundering rules – the exact rules the FinCEN File shows has been broken and ineffective.

After BuzzFeed News contacted the US Treasury Department, it announced that it would begin taking recommendations from the public and insiders on how to update the Banking Privacy Act of 1970, the has long adjusted the country’s anti-money laundering policies. Lobbyists, banks, financial services firms and academics submitted 110 comments, many of which confirm what the FinCEN Papers showed: States anti-money laundering protections States need to be overhauled.

Meanwhile, on September 18, two days before the first FinCEN Records stories were published, London officials announced plans to improve how the UK collects information about companies registered there.

Tom Keatinge, director of the Financial and Security Crime Research Center at the Royal Service Institute, said: “It’s hard to believe that the impending FinCEN publication has forced them to get their hands dirty. this.

Once the stories were made public, the calls for reform grew louder.

British lawmakers launched a formal investigation of “deeply troubling” questions raised in the FinCEN Papers. Treasury Committee of Congress to swear to check on what progress government regulators and law enforcement have made in preventing money laundering.

Speaking at the European Parliament, politicians Call for uniform regulations and stronger oversight in the form of a new oversight or greater authority for the current body, the European Banking Authority.

“Existing anti-money laundering system simply doesn’t work, ”Said Eero Heinäluoma, a Finnish member of the European Parliament, during the FinCEN Records debate. “It’s a kind of swiss cheese, full of holes.”

Other national governments have jumped on this finding as well. In the Seychelles and Liberia, journalists’ revelations have been routed to anti-corruption units for further action.

At the same time, criminals and autocratic regimes, long used to keeping their financial transactions secret, attacked journalists. Before and after the publication of the FinCEN File, reporters in countries in Africa and the Middle East were screamed, intimidated, and intimidated about lawsuits. In Turkey, a court blocked the publication of many of the stories in the FinCEN File.

At the same time, the FinCEN file has proven to be a powerful tool in the international battle for transparency and accountability.

Nigerian activists submitted the FinCEN Filing story as part of a groundbreaking lawsuit aimed at forcing the government to initiate a corruption investigation into $ 120 million that a formal audit claims has been lost. product. In Thailand, regulatory agencies probe Four domestic banks have transactions marked by one analysis for the series. And Belgian banks offer creating a platform for exchanging information about suspicious transactions and American banks have supported laws targeting shell companies.

In contrast, the banking industry lobby group tried to lower the results of the investigation.

Bank Policy Institute issued declare, supported by social media ads, tries to pour a splash of cold water on the importance of FinCEN File.

The institute objected to a central finding: that banks sometimes continue to process transactions for customers who have been repeatedly flagged for suspicious behavior. The lobby group says the government “often” requires banks to keep those accounts open so that law enforcement can monitor them.

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

The lobby group also argued that a majority of SARs were not linked to illegal activity. Citing survey information from 14 banks, the group said: “Our data indicate that about 4% of SAR cases result in any follow-up from law enforcement. A small subset of these resulted in an arrest and, ultimately, a conviction. “

“Ultimately, this means that 90–95% of the individuals that the banks report are likely to be innocent,” the group said.

But the lack of formal tracking doesn’t necessarily mean the activity is flagged as legitimate. Federal investigators do not have the resources to pursue every clue and do not automatically notify banks when they investigate the subjects of SAR, interviews with law enforcement officials for see.

By law, banks are required to report when they discover transactions that show signs of money laundering or other financial misconduct. SARs by themselves are not evidence of crime but are seen as a key element for law enforcement to pursue illegal activity.

In a speech this month to the American Banking Association, FBI Director Christopher Wray to speak The SAR “captures a wide range of staggering behavior” and allows agents to “track financial trails, investigate specific individuals and organizations, identify potential customers, connect dots and pre-investigation. ” The filings, according to law enforcement sources, can help track down parts of the drug network, clarify the funding behind the terrorist cells and help officials decide whether to blacklist. companies or individuals involved in misconduct.

Contacted by BuzzFeed News with questions for this story, the Banking Policy Institute responded by citing its own research on the issue and reiterating that the FinCEN File is partly based on “extreme” literature. narrow period ”, part of the millions of documents submitted each year.

Immediately after the publication of the FinCEN File, the global banking stocks fell significantlyBut it is not only worth sharing that has created a buzz for the industry. The series also promotes reflection and debate in many media and industry forums. “That bank scandal is a foolishness,” Independence, a UK publication noted. “The echoes … will be felt for months if not years.”

In more than 100 sections and opinion columns that have been published in trade and business publications since September, industry experts have pointed to the FinCEN File while advocating the change. At International Banker, Laurent Liotard-Vogt and Florent Palayret, who work at the business management consulting firm Chappuis Halder & Co., offer the solutions, including the provisions to halt the shell companies, and conclude: “It’s the whole system is on the brink of collapse and needs to be rethought.”

Nine days after the discovery from FinCEN Files investigation was revealed, Linda A. Lacewell, director of New York State Department of Financial Services, has published her own analysis, note that this series provided an opportunity to address longstanding problems. “Now, with this new attention, we must act,” she wrote.

Senator Elizabeth Warren, member of the Banking, Housing and Urban Commission, quoted stories in calling for significant changes in supervision.

In a statement to BuzzFeed News this week, she said that the Corporate Transparency Act is only the first step and she will support additional reforms, including putting Wall Street more accountable for financial crimes. “I will continue to push law subject executives to criminal and personal liability when their organizations comply with the law. “

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