European Nations Feature Heavily in ‘FinCEN Files’

By Koos Couvée

Latvia, Switzerland, the Netherlands and Britain are the European nations most prominently represented in a subset of data taken from the more than 2,100 suspicious activity reports leaked from the U.S. Treasury Department’s Financial Crimes Enforcement Network.

On Sunday, in a series of reports dubbed the FinCEN Files, BuzzFeed and the International Consortium of Investigative Journalists revealed they had obtained and analyzed the trove of SARs from FinCEN which together flagged more than $2 trillion of potentially illicit payments over a nearly 20-year period ending in 2017.

To “illustrate how potentially dirty money flows from country to country around the world, via U.S.-based banks,” the ICIJ also published a database from which users can review 18,000 transactions with an aggregate value of $35 billion “where sufficient details about both the originator and beneficiary banks were available.”

Analysis of that subset by ACAMS found that U.S. lenders providing dollar-clearing services to European banks reported $10.3 billion of transactions to FinCEN that flowed to and from lenders in Latvia and just under $8 billion sent from or destined to Swiss bank accounts.

Latvia’s Norvik Banka, which was later renamed PNB Banka before winding down operations last year, processed more than $1.5 billion of payments flagged as suspicious, while LTB Bank, now known as Expobank, processed more than $500 million.

Latvian officials have tightened their nation’s anti-money laundering rules following the 2018 collapse of ABLV Bank, the Baltic country’s third-largest lender, under the weight of its proposed designation as a primary money laundering concern by FinCEN.

In Switzerland, Credit Suisse handled more than $3 billion in transactions flagged as suspicious in the FinCEN Files, while the Swiss arm of French lender Societe Generale handled a little more than $1 billion.

The ICIJ database also shows that in the years covered by the leaks, Dutch banks handled at least $6.7 billion of transactions that other banks reported to FinCEN as suspicious, and U.K. lenders handled almost $6 billion and Cypriot lenders processed $1.4 billion in dubious payments.

Graham Barrow, a London-based anti-money laundering investigator and consultant who helped journalists analyze the SARs, told that because the subset of data covers only a fraction of the more than $2 trillion worth of transactions found in the FinCEN Files, readers should refrain from drawing any firm conclusions from it.

“But even with that caveat, this doesn’t surprise me, given what we already know about laundromat activity,” said Barrow said. “Latvia was a hotbed of that.”

Hundreds of the SARs cited previous, highly publicized investigations by the Organized Crime and Corruption Reporting Project and other news outlets into major money-laundering schemes, suggesting that compliance officers submitted them in response to negative media coverage of their clients.

“It’s a big defensive exercise,” said Barrow. “Filing [SARs] in retrospect can provide additional intelligence to FinCEN, but it’s hard to see how it’s benefiting any of us in the fight against financial crime.”

Britain shines again, for all the wrong reasons

The FinCEN Files have again shone light on alleged compliance lapses at a number of Britain’s largest financial institutions, including HSBC, Standard Chartered and Barclays, as well as the U.K. subsidiaries of foreign lenders.

They also reveal a secret U.S. Treasury assessment that branded the U.K. as a “higher-risk” jurisdiction on par with Cyprus, which has long carried a reputation as a hub for financial crime.

According to the ICIJ, the 2,100 SARs that comprise the FinCEN Files together refer to more than 3,200 U.K.-registered limited liability partnerships and limited partnerships, many of which held accounts at Baltic banks. British legal entities featured more frequently in the records than those of any other country.

“The U.K. may not be top when it comes to dirty money flowing in or out, but it is top when it comes to the vehicles used to launder the money,” Barrow said. “It is U.K. entities that oil the wheels of this machine—a conclusion that reinforces what some of us have been saying for a long time.”

Responding to the reports, Mel Stride, chair of the U.K. House of Commons’ Treasury Committee, fired off a series of letters Wednesday asking government officials, HM Revenue and Customs and the Financial Conduct Authority whether Britain’s efforts against financial crime have fallen short.

“Some of the information coming from the release of the FinCEN papers is deeply troubling,” Stride said in a statement. “The Treasury Committee wants to know whether ministers, HMRC and the FCA are on top of this.”

On Friday, days before the first round of stories based on the FinCEN Files posted, U.K. officials published plans to give Companies House, the agency that administers Britain’s database of corporate ownership details and other information, more authority to review and verify the accuracy of the data it receives to combat criminal abuse of U.K. legal entities.

Steve Smith, a former senior attorney with the FCA, told that banks implicated in the FinCEN Files may review their high-risk links, whether they know their clients better than they did at the time of the suspicious transactions and whether their controls would flag the same activity today.

“The FCA will be asking banks to explain their position in relation to the transactions,” said Smith, now an attorney with Eversheds Sutherland in London. “Did they have a suspicion at the time? Was it reported to the U.K. authorities? Can they provide a copy of the report? If they didn’t have a suspicion at the time, why not?”

The FCA took action against some of the banks prior to the leak, fining Standard Chartered £102 million last year and Deutsche Bank £163 million in 2017 for anti-money laundering violations.

“We have been making further enquires since the publication of the FinCEN Files and look forward to responding to the [House of Commons’ Treasury Committee],” an FCA spokesperson wrote in an email to

Contact Koos Couvée at

Topics : Anti-money laundering , Know Your Customer , Counterterrorist Financing
Source: Latvia , United Kingdom , Switzerland , Netherlands
Document Date: September 24, 2020