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Government Documents Reportedly Show Some of the World’s Biggest Banks Moving Illicit Funds

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  • Reports from BuzzFeed News and the International Consortium of Investigative Journalists detailed findings from leaked government documents which found that some of the biggest global banks moved money for criminal networks and profited from doing so.
  • The documents they drew from are known as suspicious activity reports. Very few of those reports have ever been publicized, but this leak contained 2,100 of them.
  • According to BuzzFeed, the reports revealed that major lenders like JPMorgan Chase and Deutsche Bank moved than $2 trillion in suspicious transactions between 1999 and 2017. 
  • BuzzFeed alleged that most banks could have stopped the transactions, but they often kept the money moving to collect fees and profit off the illicit funds “while facilitating the work of terrorists, kleptocrats, and drug kingpins.”
  • For the most part, banks cannot legally comment on these reports, but in statements responding to the story, many claimed to have made significant improvements to their abilities to fight financial crimes. 

BuzzFeed News’ SAR Bombshell

Some of the biggest banks in the world have helped suspected terrorists, drug cartels, rogue states, and other criminal networks move trillions of dollars, according to new reports published Sunday by BuzzFeed News and the International Consortium of Investigative Journalists (ICIJ).

The reports detail findings from thousands of leaked government documents called suspicious activity reports (SARs). Those reports, which banks are required to file if they suspect their clients of engaging in money laundering, fraud, or other illegal activity, are sent to the Financial Crimes Enforcement Network (FinCEN), an agency housed in the Treasury Department that is tasked with combating financial crimes.

FinCEN collects millions of SARs each year and sends them to law enforcement agencies all over the world. Notably, the SARs themselves do not provide evidence of wrongdoing, and the agency does not require banks to stop doing business with clients it flagged in SARs.

The investigative pieces by BuzzFeed and the ICIJ, which have been dubbed the FinCEN Files, provide an incredibly significant look into the secretive banking reports. As BuzzFeed notes, very few SARs had ever been revealed to the public prior to their reporting.

“The FinCEN Files encompass more than 2,100,” the outlet wrote, adding that the FinCEN Files “offer an unprecedented view of global financial corruption, the banks enabling it, and the government agencies that watch as it flourishes.”

According to BuzzFeed, in all, the SARs they reviewed “flagged more than $2 trillion in transactions between 1999 and 2017. Western banks could have blocked almost any of them, but in most cases they kept the money moving and kept collecting their fees.”

“[The] huge trove of secretive government documents eveals for the first time how the giants of Western banking move trillions of dollars in suspicious transactions, enriching themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and drug kingpins,” the article said. “And the US government, despite its vast powers, fails to stop it.”

Specific Examples

Regarding the government response, BuzzFeed writes: “In the rare instances when the US government does crack down on banks, it often relies on sweetheart deals called deferred prosecution agreements, which include fines but no high-level arrests.”

“Laws that were meant to stop financial crime have instead allowed it to flourish,” the report continued. “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.”

“Banks often get to the end of their agreement without actually fixing the problems. Then, instead of getting the prosecution that they had been threatened with, they just get another chance. And sometimes another.”

BuzzFeed then goes on to explicitly flag five banks, writing that its investigation “shows that even after they were prosecuted or fined for financial misconduct, banks such as JPMorgan Chase, HSBC, Standard Chartered, Deutsche Bank, and Bank of New York Mellon continued to move money for suspected criminals.”

BuzzFeed mentions a number of examples regarding those banks. One of the most outstanding instances concerned Standard Chartered, which BuzzFeed said moved money for a Dubai-based business called Al Zarooni “that was later accused of laundering cash on behalf of the Taliban.” 

During the years that Al Zarooni was a Standard Chartered customer, “Taliban militants staged violent attacks that killed civilians and soldiers.”

The report also says the SARs BuzzFeed accessed showed that HSBC’s Hong Kong branch, “allowed WCM777, a Ponzi scheme, to move more than $15 million even as the business was being barred from operating in three states.”

That scam stole at least $80 million from investors, most of whom were Latino and Asian immigrants. According to authorities, the company’s owner “used the looted funds to buy two golf courses, a 7,000-square-foot mansion, a 39.8-carat diamond, and mining rights in Sierra Leone.”

In addition to those two banks, the outlet also reported that “Bank of America, Citibank, JPMorgan Chase, American Express, and others collectively processed millions of dollars in transactions” for the family of the former mayor of Kazakhstan’s most populous city, who was later convicted of “bribe-taking and defrauding the city through the sale of public property.”

BuzzFeed claimed that those banks continued to process those transactions “even after Interpol issued a Red Notice for his arrest.” 

Separately on Sunday, NBC News, which also viewed the same SARs, published an article claiming the documents showed that “North Korea carried out an elaborate money laundering scheme for years using a string of shell companies and help from Chinese companies, moving money through prominent banks in New York.”

“The suspected laundering by North Korea-linked organizations amounted to more than $174.8 million over several years, with transactions cleared through U.S. banks, including JPMorgan Chase and the Bank of New York Mellon,” NBC added, noting that this occurred at the same time the U.S. had put strict economic sanctions against the country in place.

Response From Banks & FinCEN

FinCEN has not released any statements since the reports came out, but it does appear they knew the exposé was coming.

In a statement published Sept. 1, the agency said it was “aware that various media outlets intend to publish a series of articles based on unlawfully disclosed (SARs).”

“The unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports,” it added.

FinCEN also seemed to respond to reports that the SARs would be leaked by doing early damage control. On Sept. 17, just days before media outlets prepared to publish the documents, the agency published another statement announcing plans for a huge overhaul of national anti-money laundering rules.

Many of the banks mentioned by BuzzFeed have also responded to the article in a series of lengthy statements where each lender reiterated the fact that they cannot legally comment on SARs. They also noted that they have made improvements over the years when it comes to fighting financial crimes and money laundering. 

Regarding the release of the SARs themselves, BuzzFeed says it would not publish them because “they contain information about people or companies that are not under suspicion,” and added that some of the documents will be published later with redactions “to support reporting in specific stories.”

Currently, it is unclear if these bombshell reports will move the needle when it comes to reforms and overhauls. 

“If the government wanted to, experts in financial crime say, it could stop the dirty money coursing through the big banks, as well as the vast array of criminal activity it funds,” BuzzFeed wrote. 

Reforms that could be made, according to the outlet, include greater public accountability, arresting and prosecuting executives whose banks break the law, and requiring companies “to disclose their owners to the Treasury Department, rather than allowing people to hide behind a shell company.”

Additionally, while these reports are likely some of the biggest insights into SARs ever made public, they are just the tip of the iceberg.

“The FinCEN Files represent less than 0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017,” ICIJ noted in their version of the publication.

What’s more, in the last two years alone, FinCEN received “more than 2 million SARs” according to BuzzFeed.

“That number has nearly doubled over the past decade, as financial institutions have faced mounting pressure to file and the volume of international transactions has grown,” the outlet added. “Over the same period, FinCEN’s staff has shrunk by more than 10%. Sources there say most SARs are never even read, let alone acted upon.”

With that information in mind, the big question then becomes: will there be pressure from the public?

Even if it does, as The New York Times points out, it is unclear if that pressure would outweigh the sway big banks have on the government. 

“Recently, banks have pushed Congress to relieve them of some of their anti-money-laundering responsibilities,” The Times reported. “They say they are so worried about the legal consequences of failing to report suspicious activities that they err on the side of over-reporting transactions.”

See what others are saying: (NBC News) (The New York Times) (Business Insider)

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At Least 130,000 Covid-19 Deaths Were Avoidable, Columbia Study Finds

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  • A report from the National Center for Disaster Preparedness at Columbia University estimates that between 130,000 and 210,000 coronavirus deaths were avoidable in the United States.
  • While the U.S. accounts for just 4% of the global population, the country makes up 20% of the world’s coronavirus cases and fatalities. The country’s proportional death rate is twice as high as Canada’s and 50 times higher than Japan’s.
  • The report largely blamed the Trump administration for ignoring warning signs and scientists, arguing that he has been downplaying the issue, peddling misinformation, and turning the pandemic into a political game.
  • It also criticized the Trump administration and other federal leaders for not responding quickly enough in terms of testing and social distancing measures, which could have saved lives if implemented sooner.

Preventable Deaths in the U.S. 

The National Center for Disaster Preparedness at Columbia University released a report on Wednesday estimating that at somewhere between 130,000 and 210,000 coronavirus deaths in the United States were avoidable. 

At the time the report was made, the county had lost 217,000 thousand lives to the virus. As of Thursday morning, the U.S. death toll stands at 222,000. While the U.S. accounts for just 4% of the global population, the country makes up 20% of the world’s coronavirus cases and fatalities. 

According to the report, the U.S. has the ninth highest proportional death rate in the world behind Peru, Belgium, Bolivia, Brazil, Ecuador, Chile, Spain, and Mexico. The country’s proportional death rate is twice as high as Canada’s and 50 times higher than Japan’s.

The report estimated how many deaths may have been preventable by seeing what the U.S. death toll may have been if it had mirrored the strategies of more proactive and high-income countries.

For example, it says that if the U.S. had followed policies similar to those in Canada, the country may have seen just 85,192 fatalities, making more than 132,500 American deaths “avoidable.” If the States had mirrored Germany the death toll may have been 38,457, leaving 179,260 avoidable losses. If the U.S. modeled after South Korea’s robust intervention, Americans may have seen around 2,799 deaths, leaving nearly 215,000 deaths avoidable.

The researchers do acknowledge that other various factors could contribute to a country having a higher mortality rate, including demographics, distribution of population, health risk factors like obesity, and health care access in general. Still they do not believe this would explain the magnitude of the COVID-19 deaths in the U.S. According to the report, even if the U.S. had implemented an “averaged” response, the virus may have only claimed between 38,000 to 85,000 lives, meaning that at least 130,000 COVID-19 deaths might have been avoidable.

Failures of the Trump Administration

Many, including the researchers behind this report, largely blamed state and federal governments as well as President Donald Trump’s Administration for the catastrophic death toll in the nation. Criticism has come from leaders all over, including former president Barack Obama. During a speech on Thursday, Obama said that he handed Trump’s White House a “pandemic playbook” that got thrown out the window.

“Other countries are still struggling with the pandemic but they’re not doing as bad as we are because they’ve got a government that’s actually been paying attention,” Obama added. “And that means lives lost. And that means an economy that doesn’t work. And just yesterday, when asked if he’d do anything differently, Trump said, ‘Not much.’ Really? Not much? Nothing you can think of that could have helped some people keep their loved ones alive?” 

Because the U.S. has been repeatedly condemned for its reckless mishandling of the virus, the idea that thousands of deaths could have been prevented is not surprising. Still, seeing the staggering numbers and lives that did not need to be taken is a sobering reminder of the tragedy the country is currently facing. The report said this tragedy falls on Trump’s hands and specifically criticized the president for ignoring science and instead spreading misinformation and turning the pandemic into a political game. 

“Many nations facing the pandemic crisis have put politics aside and orchestrated a response led by public health experts and global coordination,” the report stated. 

“Unfortunately, the Trump Administration has shown hostility to much of the critical guidance and recommendations put forth by its own health agencies, with the President at times misleading the public on the scope of the threat, attempting to ‘downplay’ the extent of the crisis, and advocating for unproven therapeutical or unsafe treatments.”

A Delayed Response From the U.S.

Among the many oversights, the report claimed the administration was responsible for was a lack of testing. From the start of the pandemic, the U.S. was far behind on testing efforts, which are essential in fighting a pandemic. Both the U.S. and South Korea had their first confirmed cases on the same day. South Korea began rapid widespread testing and had conducted 250,000 by March 16. At this time in the United States, Trump was still peddling the idea that the virus was like a flu and might fade away. 

The report also noted that a lack of mask mandates and delayed responses in other areas like social distancing likely contributed to the spread of the coronavirus. If major cities in the country had introduced social distancing measures just one or two weeks earlier, it is estimated that 62% of cases and 55% of deaths could have been avoided. 

Deaths and case counts are not the only things that could have been avoided. The report noted that in New York State alone 325,000 children have been pushed to poverty because of the pandemic and 4,200 children have lost a parent to COVID-19. If policies had been implemented earlier, there could be at least 1.5 million less people grieving across the country right now. 

“The U.S. should have – and could have – done better to protect the nation, and particularly its most vulnerable populations, from a threat that was identified and recognized early in 2020,” the report said in its conclusion.

“The weight of this enormous failure ultimately falls to the leadership at the White House – and among a number of state governments – which consistently undercut the efforts of top officials at the CDC and HHS…a pandemic is not a time for a decentralized and combative national response.”

See what others are saying: (Forbes) (Axios) (CNN)

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Purdue Pharma Agrees To Plead Guilty To 3 Opioid-Related Charges in $8B Settlement, But Don’t Expect Them To Pay the Full Amount

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  • As part of a more than $8 billion settlement with the U.S. Department of Justice, Purdue Pharma will plead guilty to one count of conspiracy to defraud the U.S. government and two counts of violating anti-kickback, or bribery, laws.
  • Because Purdue filed for bankruptcy last year, that full figure likely won’t be collected by the government.
  • Under the settlement, which will need approval in bankruptcy court, Purdue would become a public benefit corporation that is controlled by the government, with revenue from opioid sales being used to fund treatment options and programs.
  • A number of state attorneys generals and Democratic lawmakers have said the settlement does not hold Purdue or its owners fully accountable and could derail thousands of other cases against the company.
  • They have also argued that the government should “avoid having special ties to an opioid company… that caused a national crisis.”

Purdue to Plead Guilty to 3 Criminal Charges

The Justice Department announced Wednesday that Purdue Pharma has agreed to plead guilty to three criminal charges related to fueling the country’s opioid epidemic. 

Notably, those guilty pleas come as part of a massive settlement worth more than $8 billion, though Purdue will likely only pay a fraction of that amount to the government.

Purdue is the manufacturer of oxycontin, which is a powerful and addictive painkiller that’s believed to have driven the opioid crisis. Since 2000, opioid addiction and overdoses have been linked to more than 470,000 deaths. 

As part of the settlement, Purdue will plead guilty to one count of conspiracy to defraud the United States. There, it will admit that it lied to the Drug Enforcement Administration by claiming that it had maintained an effective program to avoid opioid misuse. It will also admit to reporting misleading information to the DEA in order to increase its manufacturing quotas.

While Purdue originally told the DEA that it had “robust controls” to avoid opioid misuse, according to the Justice Department, it had “disregard[ed] red flags their own systems were sending up.”

Along with that guilty plea, Purdue will also plead guilty to two anti-kickback, or bribery, related charges. In one charge, it will admit to violating federal law by paying doctors to write more opioid prescriptions. In the other, it will admit to using electronic health records software to increase opioid prescriptions.

According to a copy of the plea deal obtained by the Associated Press, Purdue “knowingly and intentionally conspired and agreed with others to aid and abet” the distribution of opioids from doctors “without a legitimate medical purpose and outside the usual course of professional practice.”

The $8 billion in settlements will be split several different ways.

In one deal, the Sackler family — which owns Purdue — will pay $225 million to resolve civil fines. 

As part of the main deal, another $225 million will go directly to the federal government in a larger $2 billion criminal forfeiture; however, the government is actually expected to forego the rest of that figure.

In addition to that, $2.8 billion will go to resolving Purdue’s civil liability. Another $3.54 billion will go to criminal fines, but because Purdue filed bankruptcy last year, these figures also likely won’t be fully collected — largely because the government will now have to compete with other claims against Purdue in bankruptcy court.”

Purdue Will Become a “Public Benefit Company”

Since Purdue is in the middle of bankruptcy proceedings, a bankruptcy court will also need to approve the settlement.

“The agreed resolution, if approved by the courts, will require that the company be dissolved and no longer exist in its present form,” Deputy Attorney General Jeffrey Rosen said. 

However, that doesn’t mean that Purdue’s fully gone or that it will even stop making oxycontin. In fact, as part of this settlement, the Sacklers would relinquish ownership of Purdue, and it would then transform into what’s known as a public benefit company.

Essentially, that means it would be run by the government. Under that setup, money from limited oxycontin sales, as well as from sales of several overdose-reversing medications, would be pumped back into treatment initiatives and other drug programs aimed at combating the opioid crisis.

For its part, the Justice Department has endorsed this model. 

Should Purdue Be Punished More?

There has been strong opposition to this deal, mainly from state attorneys general and Democratic members of Congress who say it doesn’t go far enough.

Those critics argue that the settlements don’t hold Purdue or the Sackler family fully accountable, especially the Sacklers since — unlike Purdue — they didn’t have to admit any wrongdoing.

“[W]hile our country continues to recover from the pain and destruction left by the Sacklers’ greed,” New York Attorney General Letitia James said, “this family has attempted to evade responsibility and lowball the millions of victims of the opioid crisis. Today’s deal doesn’t account for the hundreds of thousands of deaths or millions of addictions caused by Purdue Pharma and the Sackler family.”

“If the only practical consequence of your Department’s investigation is that a handful of billionaires are made slightly less rich, we fear that the American people will lose faith in the ability of the Department to provide accountability and equal justice under the law,” A coalition of 38 Democratic members of Congress said in a statement to Attorney General Bill Barr last week.

While this settlement doesn’t include any convictions against the Sacklers specifically, as the Justice Department noted, it also doesn’t release them from criminal liability and a separate criminal investigation is ongoing. 

Still, last week, 25 state attorneys general asked Barr not to make a deal that includes converting Purdue into a public benefit company, urging the Justice Department to “avoid having special ties to an opioid company, conflicts of interest, or mixed motives in an industry that caused a national crisis.” 

Part of their concern is that the government would essentially run this new company while also holding the original one accountable. Those attorneys general instead argued that Purdue should be run privately but with government oversight. 

See what others are saying: (Associated Press) (The New York Times) (Fox Business)

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Parents of 545 Children Separated at U.S. Border Still Can’t Be Found

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  • A Tuesday filing update from the ACLU and Department of Justice revealed that a Steering Committee in charge of reuniting families that were separated at the U.S.-Mexico border has not been able to find parents of 545 separated children. 
  • Efforts to reach these parents via telephone have been unsuccessful and those involved are not hopeful that will change. Two-thirds of these parents are believed to be in their respective countries of origin.
  • So far, parents for 485 kids have been reached.
  • Finding these parents is an already complicated process made even more strenuous by the coronavirus pandemic. On-the-ground searches were suspended because of COVID-19 but have now picked up in limited capacity.

Parents of 545 Children Remain Unfound

A Tuesday court filing from the U.S. Department of Justice and American Civil Liberties Union revealed that the parents of 545 children who had been separated at the U.S.-Mexico border have not been found or contacted.

Two thirds of those parents are expected to be in their respective country of origin. While there have been efforts to reach these families via phone, they have not been successful. Other efforts to reach these parents are in the works. 

Thousands of families were separated in 2018 under President Donald Trump’s zero tolerance policy, but a federal judge ordered that those families should be reunited. Soon after, many were, but in reality many more families had actually been separated. It was later revealed that the Trump Administration had been separating families back in 2017 under a pilot program. A court order reuniting those families was not issued until last year. 

A Steering Committee, of which the ACLU and other organizations are members, is now searching for these parents. According to the filing, the government provided a list of 1,556 children. The current focus on reaching children whose membership in this case is not contested and who have available contact information for a sponsor or parent. The Steering Committee has attempted to reach the families of all 1,030 children who fit that bill, and have successfully reached the parents, or their attorneys, for 485 kids. 

“There is so much more work to be done to find these families, Lee Gelernt, the deputy director of the ACLU Immigrants’ Rights Project, told NBC News, which broke the story.

“People ask when we will find all of these families, and sadly, I can’t give an answer. I just don’t know,” he continued. “But we will not stop looking until we have found every one of the families, no matter how long it takes. The tragic reality is that hundreds of parents were deported to Central America without their children, who remain here with foster families or distant relatives.”

Efforts to Find Parents

Because so much time has passed between family separation practices and today, initiatives to find those parents are difficult. They are also further complicated by the fact that during the pilot program, U.S. officials did not collect thorough information from these parents, and many were deported before courts ordered they be reunited with their kids. 

Nan Schivone, the legal director for Justice in Motion, which carries out on-the-ground searches for parents, told The Washington Post that attorneys “take the minimal, often inaccurate or out-of-date information provided by the government and do in-person investigations to find these parents.” 

Schivone said it is an “an arduous and time-consuming process on a good day.” Sometimes, these lawyers might find themselves in remote villages where outsiders are suspect and language barriers can slow down communication.

The pandemic halted these efforts as lockdowns and curfews made it impossible for Justice in Motion to look for parents abroad. Though, Tuesday’s filing revealed that “limited physical on-the-ground searches for separated parents has now resumed where possible to do so.” 

See what others are saying: (NPR) (NBC News) (Washington Post)

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