Global banking system termed a network of criminality
Documents from the US Treasury's Financial Crimes Enforcement Network, known as FinCEN, obtained by BuzzFeed News and investigated by the International Consortium of Investigative Journalists, showed that between 1999 and 2017 more than $2 trillion in transactions were flagged as involving possible money laundering or other criminal activities.
The great 19th century French writer Honoré de Balzac once noted that behind every great fortune there is a crime. In the 21st century, one would have to say that behind the great fortunes of the world's major banks there is a network of criminality. This reality is documented in the revelations published over the weekend concerning a small portion of the international operations of the world's major banks.
But as the investigation revealed, the $2 trillion worth of suspicious transactions was "just a drop in a far larger flood of dirty money gushing through banks around the world." The files examined in the investigation "represent less than 0.02 percent of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017."
The United Nations Office on Drugs and Crime estimates that $2.4 trillion in illicit money is laundered through the global banking system each year, equivalent to 2.7 percent of global output, but only 1 percent of the illegal traffic is detected by the authorities. The banks involved are some of the biggest names in the world, including JPMorgan, HSBC, Standard Charter Bank and Bank of New York Mellon. In some cases, they continued to profit from the dirty money flow even after being previously fined.
Under existing laws, banks are required to file suspicious activity reports (SARs) that point to potential criminal activities. But any conception that this is a method of crime prevention would be completely mistaken. In fact, it is a means of crime facilitation. As BuzzFeed News noted: "Laws that were meant to stop financial crime have instead allowed it to flourish. So long as a bank files a notice that it may be facilitating criminal activity, it all but immunizes itself and its executives from criminal prosecution. The suspicious activity alert effectively gives them a free pass to keep moving the money and collecting the fees."
In the rare cases where authorities do decide to take action, it involves making a deal in which the bank agrees to pay a fine. But the fine is not imposed on the executives involved. It is paid for by the bank and treated as a minor operating cost, while the bank continues to obtain fees and profits from the dirty money transactions.
It would likewise be a grave mistake to conclude that the criminal money operations are somehow separate from the regular activities of the global financial and banking system. In fact, they are an integral component of them. There is no Chinese wall separating so-called legitimate activities from illegitimate ones.
In 2011, the US Senate report on the 2008 financial crisis revealed that major banks such as Goldman Sachs and Deutsche Bank were engaged in what amounted to outright criminal activity in the lead-up to the crisis. This included selling financial products they knew were going to fail, and then making deals to profit from the failure of the same financial products.
No one was even prosecuted, let alone jailed, and in an extraordinary admission to the Senate Judiciary Committee in March 2013, President Obama's attorney general, Eric Holder, revealed why, essentially acknowledging that criminality was not some extraneous activity, but was deeply embedded in the very foundations of the US and global financial system.