over 3 years ago • 2 mins
Leaked documents showed a dozen banks – including JPMorgan, HSBC, and Deutsche Bank – have been helping criminals remove stubborn stains from their ill-gotten gains 🧼
If you’ve raised a chunk of change doing something illegal – like selling drugs or running a Ponzi scheme – you’ll need to “launder” your tainted money through the financial system before you can really enjoy it. The aim is to get shady transactions recognized as legitimate, and banks need to be the ones to stop you.
But according to reports over the weekend, some of the world’s biggest banks did billions of dollars’ worth of business with people they couldn’t identify – and often carried on even after learning they were criminals 🏦 Among the many allegations: Barclays enabled a prominent Russian to avoid US sanctions, and JPMorgan let more than $1 billion flow through an account that might’ve been owned by a wanted gangster.
Financial regulators – which have been quick to prosecute rule-breaking banks ever since the global financial crisis caught them napping – have already issued tens of billions in fines for a laundry list of infractions, from mis-selling mortgages to breaching US sanctions 💵 And just like in 2008, the publicity surrounding the scandal could embarrass regulators into more aggressive enforcement – further hitting profit at banks already struggling with record-low interest rates. That might be why bank shares around the world fell on Monday, with HSBC’s stock in particular hitting a 25-year low.
Around 80% of cross-border trade is transacted in US dollars, and this leak is proving just how much power that gives the country 🇺🇸 Banks from Angola to Venezuela are having to snitch on clients suspected of fraud, as American regulators peer at the financial plumbing in almost every corner of the globe. That makes them an invaluable intelligence-gathering tool – and one lots of countries have no alternative but to play ball with.
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