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THOUGHTS ON THE ‘FINCEN FILES’ & ONGOING RISKS OF SAR FILING PRACTICES:  

23/09/2020

In a series of stories called “The FinCEN Files” first published on Sunday, BuzzFeed and The International Consortium of Investigative Journalists revealed that they had reviewed and analysed a trove of suspicious activity reports, or SARs, which flagged more than $2 trillion in payments over a nearly 20-year period ending in 2017.

The ICIJ also published a database allowing users to search for a selection of the data involving more than

  • 18,000 transactions totalling $35 billion.

Many of the records were compiled in response to U.S. congressional requests following investigations into Russian interference in the 2016 presidential election.

  • Deutsche Bank is the most frequent flier in the SAR records obtained by BuzzFeed, with flagged payments totalling $1.3 trillion, followed by J.P. Morgan with $514 million.

Of the 2,100 SARs obtained by BuzzFeed, 130 of them flag a volume of transactions totalling more than $1 billion.

  • The largest is an August 2014 SAR by J.P. Morgan for an unspecified precious metals firm that transferred $335 billion.  The records showed that J.P. Morgan allowed more than $6.9 million in payments to Paul Manafort, Donald Trump’s former campaign chairman, for at least 14 months following his resignation from the campaign in August 2016, the ICIJ found. The decision followed news reports about Manafort’s work for a Russia-backed Ukrainian leader.

  • They also showed that from September 2013 to September 2014, Standard Chartered processed 2,055 transactions worth over $24 million for Arab Bank, a Jordanian lender accused in a U.S. lawsuit of enabling transactions that led to a 2003 bus bombing in Jerusalem, among other terror attacks.

  • Standard Chartered continued its relationship with Arab Bank into February 2016, even after a federal jury ruled against the lender, processing another $12 million in payments that referred to “charities” or “gifts” while flagging those transfers as potential terror finance risks, according to the ICIJ.
Other SARs showed that
  • P. Morgan transferred at least $1.2 billion for Malaysian financier Jho Low between 2013 and 2016, in the years when he allegedly siphoned money from the sovereign wealth fund 1MDB.

BuzzFeed and the ICIJ cited the FinCEN Files to argue that banks knowingly continue to process criminal payments, and file SARs partly in an effort to absolve themselves of potential liability—a claim that obscures the purpose and the value of the intelligence database, according to a compliance officer at a mid-sized bank on the East Coast.

The leak highlights that many banks should be proactively closing accounts more often, but many prefer to file multiple SARs without taking action towards the customer, according to a New York-based compliance officer for an Asian lender.

  • “My bank actually files defensive SARs,” the person said.
  • “Some [are] maybe too defensive… BSA [Bank Secrecy Act] investigators see things and we file SARs showing that some relationships are obviously risky, but banks decide to keep the accounts.
  • I’ve seen banks file 20 SARs on a client and not close the account.”

SOURCE https://www.moneylaundering.com/news/fincen-files-highlight-ongoing-risks-of-sar-filing-practices-sources/?type=free – AUTHOR Daniel Bethencourt at dbethencourt@acams.org