Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Companies

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors

Key takeaways from the FinCen Files

share with twitter share with LinkedIn share with facebook
09/21/2020 | 05:42pm EDT
The United States Department of the Treasury is seen in Washington, D.C.

Shares of the biggest global banks dropped on Monday after news reports said they allowed large sums of allegedly illicit funds to move through the financial system, despite red flags about the origins of the money.

Britain-based HSBC Holdings PLC and Standard Chartered PLC fell to 25-year lows, while U.S. banks JPMorgan Chase & Co and Bank of New York Mellon Corp were down 4.1% and 4.7%, respectively.

These lenders were named in recent articles by BuzzFeed News and the International Consortium of Investigative Journalists, based on leaked documents, known as the FinCEN Files.

Here are the key takeaways from the reports:

1. What are the FinCEN Files?

The investigative series is named after the U.S. Department of Treasury's Financial Crimes Enforcement Network, or FinCEN, which receives alerts from banks and other financial firms about transactions that appear to be questionable. Those alerts are called suspicious activity reports, or SARs.

Financial institutions filed SARs for more than $2 trillion worth of transactions between 1999 and 2017, according to the reports.

The leaked files pertained to roughly 2,100 SARs filed with FinCEN between 2011 and 2017, representing less than 0.02% of the more than 12 million SARs during that time.

Among the types of transactions highlighted by the report: funds processed by JPMorgan for potentially corrupt individuals and companies in Venezuela, Ukraine and Malaysia; money from a Ponzi scheme moving through HSBC; and money linked to a Ukrainian billionaire processed by Deutsche Bank AG.

2. Why would a transaction be deemed "suspicious"?

U.S. federal laws require certain financial institutions to file SARs if there are signs of money laundering, insider trading, cyber attacks or various types of fraud. The existence of a report does not confirm wrongdoing, but alerts regulators to possible criminal activity.

Banks, money exchanges, securities brokers, insurance companies, casinos and other financial institutions are required to file SARs within 60 days of detection, according to the Treasury Department.

3. What went wrong?

U.S. agencies tasked with enforcing money-laundering laws rarely took any action after receiving SARs, nor did big banks after filing them, according to the FinCEN Files.

As a result, the millions of suspicious activity reports had little-to-no effect on policing the global financial system, the articles said.

4. What does it mean for banks?

It is not entirely clear what negative consequences, if any, banks highlighted in the FinCen Files stories may face.

Analysts on Monday said the revelations were unlikely to lead to additional regulatory penalties or fines, because the behavior detailed in the articles showed that the system is flawed, but did not make clear that the banks had broken any rules or laws.

It is possible that some banks with dated technology may have to spend more money improving compliance systems, and that politicians who typically criticize the industry will scrutinize the matter further, but there was no immediate sign that was happening yet.

"Unless there are more substantive allegations of fact, we expect that (these articles) will not have lasting impacts on the industry or stock prices," Oppenheimer analyst Chris Kotowski wrote in a note to clients.

(This story refiles to remove extraneous metadata)

(Reporting by C Nivedita and Abhishek Manikandan in Bengaluru; Editing by Bernard Orr)


Stocks mentioned in the article
ChangeLast1st jan.
BANK OF NEW YORK MELLON CORPORATION (THE) -1.42% 33.65 Delayed Quote.-32.29%
DEUTSCHE BANK AG 0.97% 7.866 Delayed Quote.12.17%
HSBC HOLDINGS PLC 0.71% 321.95 Delayed Quote.-46.11%
JPMORGAN CHASE & CO. -0.31% 96.49 Delayed Quote.-30.75%
OPPENHEIMER HOLDINGS INC. 1.47% 26.8 Delayed Quote.-3.68%
STANDARD CHARTERED PLC -6.56% 348.1 Delayed Quote.-47.54%
share with twitter share with LinkedIn share with facebook
Latest news "Companies"
10:07aTELEFONICA DEUTSCHLAND : NorldLB reiterates its Buy rating
MD
10:06aUNITED CONTINENTAL : offers free COVID-19 tests on flights between NYC area, London
AQ
10:06aWATURU HOLDING A/S : – the subsidiary Watgen Medical A/S has obtained a patent for a device for topical treatment
AQ
10:06aMOLSON COORS BEVERAGE : third-quarter sales slide 3.1 per cent amid COVID-19 restrictions
AQ
10:06aCOMERICA BANK : 's California Index Improved
PR
10:06aFEDEX TRADE INDEX : Small Businesses View Trade, Technology as Avenues for Growth, Essential to COVID-19 Recovery
BU
10:06aThe Future of Diesel Technology – Part 2 to Be Explored on November 10 Virtual Event
GL
10:05aGERDAU S A : 3rd Quarter in IFRS
PU
10:05aQUANTA SERVICES : Earnings Presentation Q3 2020
PU
10:05aEMCOR : Quarter 3 Earnings Call
PU
Latest news "Companies"