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Global Banks Tumble Over Money Laundering Revelations

Global Banks Tumble Over Money Laundering Revelations-J P Morgan Chase

September 22, 2020

HSBC, Deutsche Bank, JPMorgan Chase… These big names in finance were badly mauled in the stock market on Monday, after revelations by a consortium of journalists accusing them of having allowed the laundering of dirty money on a large scale.

On Wall Street, the giant JPMorgan Chase dropped 3.1%. In its wake, Bank of America dropped 2.9 percent and Wells Fargo 4.3 percent, in a broadly declining session driven by an upsurge in VIDOC-19 cases.

In Frankfurt, Deutsche Bank fell 8.8%, while Standard Chartered, also cited in the survey, lost 5.8% in London. In Hong Kong, HSBC fell to its lowest level in 25 years. Also mentioned in the case, for helping customers in Poland transfer suspicious funds out of Russia, ING Bank plummeted 9.3 percent in Amsterdam. The French bank Société Générale was also targeted by the investigation, which accuses it of a lack of transparency with regard to certain clients of its Swiss subsidiary SGPB. It sold 7.7% in Paris.

In its investigation conducted by 108 international media from 88 countries, the International Consortium of Investigative Journalists (ICIJ) denounces shortcomings in the regulation of the sector. The “FinCEN Files” investigation is based on thousands of “suspicious activity reports” submitted to the U.S. Treasury Department’s Financial Police Service (FinCEN) by banks around the world, but “kept out of public view”.

These documents cover $2 trillion in transactions between 1999 and 2017. This would include money from drugs and crime and money diverted from developing countries. However, the suspicious activity reports “are not declarations of crime or fraud, but alert to potential cases of economic crime,” argues UK Finance, the British finance lobby, in a press release sent to Agence France-Presse.

“Additional activities may occur and not present any suspicion or, on the contrary, confirm the original suspicion […]. The regulatory authorities may also ask a financial institution to maintain the client relationship in order to allow further investigation. »

For the head of the American banking lobby, Bank Policy Institute, Greg Baer, it is also “absurd that the media should rely on the suspicious activity reports transmitted by the banks to the authorities to accuse them of hiding illegal activities.

JPMorgan Chase points out that she cannot defend herself on the content of the accusations since she is prohibited from discussing these suspicious activity reports. For its part, HSBC presents ICIJ’s accusations as old and prior to an agreement reached on the subject in 2012 with the U.S. Department of Justice.

Deutsche Bank also assures that the consortium’s disclosures were in fact “well known” to its regulators and said it has “devoted significant resources to strengthening its controls.

Societe Generale, for its part, states that “all suspicious cases it detects are […] systematically reported to the competent authorities, and these reports include all the elements that the bank is able to communicate in accordance with local regulations”.

In addition, Wall Street has ignored the White House economic adviser’s statement that the U.S. economy does not need an additional public boost to move forward. “We are experiencing a self-sustaining…recovery, with the economy recovering quickly after a sharp decline,” Kudlow told reporters Monday, acknowledging that “the battle” was “not over yet.

Democrats and Republicans have been trying for nearly two months to agree on new aid packages. The discussions are about a plan that “has some elements that could help” the economy, but “I don’t think recovery depends on this assistance program,” said Donald Trump, an adviser to President Obama.

At the end of March, the U.S. government released $2.2 trillion in aid as part of a massive stimulus package called the Cares Act, which was extended by nearly $500 billion at the end of April. Additional aid is now considered crucial by economists, including those at the U.S. Central Bank.

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