The FinCEN files – major document leaks made

FinCEN files
The leaks came from the financial crimes branch of the US Treasury department. Source: R Boed (via. Flickr)
Over 2,500 documents have been leaked from the US Treasury department, revealing roughly two trillion dollars of suspicious transactions.

By Tom Kingsbury | Political Editor

Over 2,500 documents have been leaked from the US Financial Crimes Enforcement Network (FinCEN), revealing roughly two trillion dollars of suspicious transactions.

The files are mostly made up of suspicious activity reports (SARs), made by banks to FinCEN, the part of the US Treasury that handles financial crimes.

More than 3,200 UK registered companies are referenced in the SARs – more than any other country.

The files reveal activity by British and international banks on behalf of individuals and organisations acting illegally. The banks often processed payments despite knowing this.

Below are some of the cases which have been uncovered by various journalists, who have been going through the files.

HSBC and the Ponzi scheme

HSBC was shown to have facilitated transfers totaling $80m (£62m) into accounts in Hong Kong from a Ponzi scheme in the US, even after it found out about it.

The scheme involves duping investors into joining and then getting them to recruit new members themselves, with the money funnelling upwards until the scheme collapses.

In this instance, the scheme, started by Chinese national Ming Xu, was called WCM777.

One investor was killed as a result of the scheme, which he unwittingly roped another individual into, and thousands of people in poor communities were scammed out of their money.

The UK’s largest bank moved the money through its US business in 2013 and 2014, even after it learned of the scam from Californian regulators.

The scheme was set up months after HSBC said it would improve its procedures, following US criminal prosecution for laundering billions of dollars of Mexican drug cartel money.

Conservative donor linked to suspicious Russian money

The husband of the biggest female Conservative Party donor in British history received $8m (£6.1m) from a Russian oligarch with ties to Vladimir Putin, the Russian President.

Lubov Chernukhin has donated £1.7m to the Conservative Party and spent time with the last three Prime Ministers.

Her husband received the sum from Suleyman Kerimov, a former member of the upper chamber of Russian parliament and former Deputy Minister of Finance under Putin. Kerimov was sanctioned by US authorities, who said they were targeting those who “play a key role in advancing Russia’s malign activities”.

The majority of Chernukhin’s donations to the Conservative Party came after the payment was made to her husband, though there is no evidence it was the same money she donated.

UAE Central Bank did not prevent Iranian sanctions evasion

The Central Bank of the UAE failed to act after learning a local bank was helping Iran avoid sanctions.

The local bank – Gunes General Trading – was shown by the FinCEN documents leak to have used the UAE’s financial system to move $142m (£110m) on behalf of the Iranian government, circumventing sanctions placed upon it.

Gunes General Trading is alleged to have been under the control of Turkish-Iranian gold trader Reza Zarrab, who in 2017 pleaded guilty to fraud, conspiracy, and money laundering.

The central bank was contacted regarding suspicious activity from Gunes General Trading, but it was able to continue its activity after this point using two different accounts, processing a further $108m on top of what it had managed until then.

Suspected use of Barclays by members of Russian “inner circle”

Barclays is thought to have been used to launder money and avoid sanctions by billionaire and childhood friend of Putin Arkady Rotenberg and his brother Boris.

The brothers were labelled by the US Treasury department as “members of the Russian leadership’s inner circle”.

The two are thought by the US senate to have made secret art purchases through a Barclays account to avoid sanctions and launder money.

The leaked documents show that a company suspected by UK investors as belonging to the Rotenbergs – called Advantage Alliance – moved a total of £60m, with many of the transactions coming after the brothers had been sanctioned.

British bank may have moved money with links to terrorist activity

Standard Chartered, a British bank, moved almost $12m (£9.4m) of money that may have had links to the financing of terrorist activity.

The bank moved the money to Jordan’s Arab Bank between 2014 and 2016.

In 2014, a US jury ruling found that Arab Bank had knowingly worked for Palestinian militant group Hamas, providing banking services to it and the charities it controlled.

In the case, evidence was put forward suggesting that in the early 2000s Arab Bank had been used by Hamas to move money around and to pay the families of suicide bombers.

The verdict was overturned due to the judge giving the jury incorrect instructions. However, in 2015 Arab Bank agreed a settlement with victims and relatives of the victims of 22 attacks made by Hamas in Israel.

Hamas is considered a terrorist organisation by the US, EU, and Israel, though not the UK.

Abramovich’s secret player stakes

Chelsea owner Roman Abramovich has been revealed to have held secret investments in rival players.

Through an offshore company, Abramovich had been taking stakes in players’ transfer fees in a process called third-party ownership (TPO). The process was banned by the English Premier League in 2008, and internationally in 2015.

This led to a case where Chelsea’s owner had a stake in a player – Andre Carrillo – playing against Abramovich’s own team in two games during the 2014 Champions League.

The FinCEN files – the latest in years of financial leaks

The FinCEN files are unique for their wide range of transactions from several different banks. Generally, a leak would only reveal the files of a small number of banks or organisations.

But the FinCEN leaks are only the latest in a significant number of leaks in recent years.

In 2017, the Paradise Papers were leaked. The documents were mostly from an offshore legal service provider called Appleby, and exposed the dealings of a range of politicians, public figures and members of the corporate world.

The 2016 Panama Papers leaked documents from a law firm called Mossack Fonseca, which helped the wealthy hide their money in tax havens, launder money and avoid sanctions.

The Swiss Leaks came in 2015, when it was revealed that HSBC’s Swiss private bank was helping its clients avoid millions in tax.

Prior to this were other prominent leaks, such as the 2014 Luxembourg leaks, the 2012 offshore leaks and the 2010 Wikileaks cables release.

The UK commits to change

The government announced September 18 that it will make reforms to “clamp down on fraud and money laundering”.

It says company directors will not be appointed until the director’s identity has been verified, which the government suggests will make it easier to trace illicit activity.

The Minister for Corporate Responsibility, Lord Callanan, said:

“Mandatory identity verification will mean criminals have no place to hide – allowing us to clamp down on fraud and money laundering and ensure people cannot manipulate the UK market for their own financial gain, whilst ensuring for the majority that the processes for setting up and running a company remain quick and easy.”

The UK has been accused of being too soft on illegal financial activities, with 3,282 companies that appear in the FinCEN documents being UK-based.

The Intelligence and Security Committee’s July Russia report noted a significant amount of Russian wealth was used for influence in the UK. It said that London “offered ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’.”

The report also stated that there were a number of links between the House of Lords and Russia, and that they should be “carefully scrutinised, given the potential for the Russian state to exploit them.”


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