FinCEN report: HSBC shares drop to lowest level since 1995

Andrew Cummings
September 21, 2020

A cache of over 2,000 suspicious activity reports (SARs) was filed with the authorities by banks who suspected wrongdoing; it reportedly contains allegations that a number of top United Kingdom lenders allowed dirty money into their accounts.

HSBC and StanChart shares touched their lowest level in as much as 25 years, although they fared little worse than their peers amid a wider selloff in global stocks.

These transactions were processed via three US-based banks, which filed suspicious activity reports with FinCEN, namely The Bank of New York Mellon Corp (14 transactions, sent US$10,100, received US$4.76 million), Standard Chartered Plc (seven transactions, sent US$13.37 million), and JP Morgan Chase & Co (two transactions, received US$121,185).

The investigation, which was led by 108 worldwide media outlets from 88 different countries, is based on thousands of suspicious activity reports (SAR) submitted to the US Treasury Department's financial law enforcement agency, FinCEN, by banks from around the world.

Now the banks are trying to come out clean as HSBC told Reuters that all the data in the documents are "historical" and the bank has "embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions".

The SARs contained in the leak suggest that $2 trillion (£1.5 trillion) worth of potentially fraudulent transactions could have been conducted between 1999 and 2007. The private bank was allegedly involved in most of the suspicious transactions, ICIJ report shows.

"This brings out the point that managing financial crime risk goes beyond making SARs", said Etelka Bogardi, a Hong Kong-based financial services partner at Norton Rose Fulbright.

Investors dumped bank stocks on Monday after a report said nearly all Indian banks were involved in a number of suspicious transactions between 2010 and 2017.

"[The] extent that information referenced by the ICIJ is derived from SARs, it should be noted that this is information that is pro-actively identified and submitted by banks to governments pursuant to the law", Deutsche Bank said in a statement.

Staff at major banks often used Google searches to learn who was behind large transactions, it said.

The International Consortium of Investigative Journalists cited leaked official USA documents that said the bank "kept profiting from powerful and unsafe players" in the past two decades.

Global banks in the recent years have boosted investments on technology and staff to deal with tighter anti-money laundering and sanctions regulatory requirements across the world.

In a statement released prior to the investigation's publication, FinCEN said that the "unauthorized disclosure of SARs is a crime that can impact the national security of the United States".

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