UK banks en­abled ‘flow of dirty money’, leaked se­cret files claim

The Daily Telegraph - Business - - Business - By Louis Ash­worth

BRI­TISH banks have been ac­cused of en­abling fraud­sters, crim­i­nals and money-laun­der­ers, fol­low­ing a leak of se­cret files.

A cache of more than 2,000 sus­pi­cious ac­tiv­ity re­ports (SARs) – those filed to the au­thor­i­ties by banks who sus­pect wrong­do­ing – re­port­edly con­tains al­le­ga­tions that a num­ber of ma­jor UK lenders al­lowed dirty money to flow through their ac­counts.

Over 100 global or­gan­i­sa­tions re­ported on the so-called FinCEN Files, which were ob­tained by Buz­zFeed News and shared with the In­ter­na­tional Con­sor­tium of In­ves­tiga­tive Jour­nal­ists (ICIJ). Al­le­ga­tions in the con­sor­tium’s re­port­ing in­clude that HSBC al­lowed money from a Ponzi scheme to be trans­ferred around the world and that a close as­so­ci­ate of Vladimir Putin, the Rus­sian pres­i­dent, may have used Bar­clays to laun­der money and avoid sanc­tions.

The SARs con­tained in the leak cover more than $2 tril­lion (£1.5 tril­lion) worth of trans­ac­tions, con­ducted be­tween 1999 and 2007.

Pro­duced by banks’ com­pli­ance of­fi­cers, the re­ports are not ev­i­dence of wrong­do­ing, but are aimed at alert­ing au­thor­i­ties to po­ten­tially sus­pi­cious trans­ac­tions. How­ever, lenders are sup­posed to block trans­ac­tions if they have ev­i­dence of crim­i­nal ac­tiv­ity.

The ICIJ’s Fergus Shiel said the re­port showed that money for drug car­tels, cor­rupt regimes, arms traf­fick­ers and other in­ter­na­tional crim­i­nals con­tin­ued to be moved around, and how a “bro­ken US-led en­force­ment sys­tem per­pet­u­ates busi­ness as usual”.

HSBC said it does not com­ment on sus­pi­cious ac­tiv­ity re­port­ing. Re­spond­ing to the al­le­ga­tions, the lender said it “em­barked on a multi-year jour­ney to over­haul its abil­ity to com­bat fi­nan­cial crime” from 2012 on­wards. It added: “HSBC is a much safer in­sti­tu­tion than it was in 2012.”

Fur­ther re­port­ing said that Bar­clays be­gan an in­ter­nal in­ves­ti­ga­tion into ac­counts it sus­pected were linked to oli­garch Arkady Roten­berg and his brother Boris, close friends of Mr Putin, who are sub­ject to US sanc­tions aimed at freez­ing them out of the West­ern fi­nan­cial sys­tem.

In a state­ment, Bar­clays said “we be­lieve that we have com­plied with all our le­gal and reg­u­la­tory obli­ga­tions, in­clud­ing in re­la­tion to US sanc­tions”.

Buz­zFeed also re­ported that the Fi­nan­cial Con­duct Au­thor­ity ac­cused Deutsche Bank in a 2016 let­ter of be­ing will­ing to take on “very prof­itable clients, re­gard­less of fi­nan­cial crime risks”. The City watch­dog went on to ex­on­er­ate Deutsche’s se­nior man­age­ment.

Deutsche Bank said the ICIJ “has re­ported on a num­ber of his­toric is­sues”. “The is­sues have al­ready been in­ves­ti­gated and led to reg­u­la­tory res­o­lu­tions in which the bank’s co­op­er­a­tion and re­me­di­a­tion was pub­licly recog­nised,” it said in a state­ment. “Where nec­es­sary and ap­pro­pri­ate, con­se­quence man­age­ment was ap­plied.”

It added: “SARs are alerts of po­ten­tial is­sues, not proven facts.”

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