FinCEN Files: The flow of dirty money

The unchecked movement of dirty money may not register as an immediate threat in a world beset by headline-grabbing crises. But the consequences are profound, as narcotraffickers, smugglers and Ponzi schemers shift illicit profits beyond the reach of authorities, and despots and corrupt captains of industry swell their own ill-gotten fortunes and consolidate power, aided by the powerful and the banking system.

In 2019 the US media outlet BuzzFeed News obtained a large cache of secret US Department of the Treasury (USDT) financial records and shared them with the International Consortium of Investigative Journalists (ICIJ). These are the FinCEN Files, documents from the USDT's regulatory bureau for safeguarding the financial system — the Financial Crimes Enforcement Network.

Over the past 16 months, 400 journalists from 88 countries burrowed into the leaked records, conducted interviews with investigators and victims, pored over court and archival records and reviewed data on millions of transactions that took place between 1999 and 2017.

The FinCEN Files are based on Suspicious Activity Reports (SARs). These are records of money movements that the banks themselves compile and submit to the US Department of the Treasury, when they suspect a possibly suspicious activity. A review of the files casts a disturbing spotlight on the complex trail left by nearly $2 trillion (€1.7 trillion) of suspicious funds being maneuvered around the globe — and on the role of banks.

The failure of banks

"It isn't the criminals themselves that launder the money. So the banks have a really important role to play because they are the system by which that money is being moved from their country, to a nice, safe place," Graham Barrow, a money laundering expert, told ICIJ. "All of us ultimately pay the price for this. Because this money is coming from our taxes and our contributions to society," Barrow said.

ICIJ, BuzzFeed News and media partners including DW's Pelin Ünker examined more than 2,100 SARs. The ICIJ team gained access to an additional 17,600 records with links to financial institutions through Freedom of Information Act requests as well as from other sources during the investigative reporting process. 

The FinCEN Files — dense bulletins full of technical information — are the most detailed USDT records ever leaked. They disclose suspicious transactions processed by major banks including Deutsche Bank, HSBC, JPMorgan Chase and Barclays.

SARs are not necessarily evidence of wrongdoing. They reflect the views of watchdogs within banks. Officially known as compliance officers, these individuals are obliged to report transactions which could possibly be connected to financial crime, such as money laundering or tax evasion, or activities involving clients with high-risk profiles or those who have had run-ins with the law.

The USDT requires financial institutions operating in the US to file SARs with the Financial Crimes Enforcement Network, when they have reason to suspect a transaction may be in violation of regulations. The FinCEN is tasked with safeguarding the financial system from illicit use and money laundering. Failure to file SARs can expose banks to fines or penalties.

According to BuzzFeed News and ICIJ, FinCEN received more than 2 million SARs in 2019 alone. Between 2011 and 2017, the financial crimes unit collected more than 12 million SARs. The ICIJ investigation found that big banks cleared more than $2 trillion in transactions that they later flagged as suspicious. In other words, the banks filed their report on suspicious activity after conducting the transaction.

Most of the SARs in the FinCEN Files came from a small number of large banks: Deutsche Bank (982), Bank of New York Mellon (325), Standard Chartered Bank (232), JPMorgan Chase (107), Barclays (104) and HSBC (73). Together, these banks filed more than 85% of the SARs contained in the leak.

US government condemns leaks

When approached about the content of the suspicious activity reports, FinCEN declined to comment. Instead it condemned the document leak.

FinCEN Chief Council of the USDT, Jimmy Kirby, responded to BuzzFeed News that the "unauthorized disclosure of SARs can disrupt ongoing or future law enforcement investigations that involve information contained in SARs." Leaking the documents "allows criminal actors to dispose of relevant evidence by learning of the existence of an investigation or potential investigation; and place witnesses and victims at risk of physical harm."

In the written response, Kirby also pointed out that "such unauthorized disclosures have a chilling effect on filing institutions who … may be less willing to report actionable information to FinCEN for fear it will be unlawfully made public."

Department of Justice Criminal Division spokesperson Matt Lloyd told ICIJ: "The Department of Justice stands by its work and remains committed to aggressively investigating and prosecuting financial crime — including money laundering — wherever we find it."

A network of political insiders: Paul Manafort

The dozens of prominent figures appearing in the documents read like a who's who of well-connected political insiders. They include Paul Manafort, the former Donald Trump campaign manager, who was convicted of fraud and tax evasion. JP Morgan reported that it moved money between Manafort and his associate shell companies as recently as September 2017, long after his ties to Russian-connected Ukrainian officials and suspected money laundering had been widely reported.

Often the person tied to a suspicious transaction was one step removed from the boldfaced name: a child, an associate, or a spouse — as in the case of Atiku Abubakar. The former Nigerian vice president was indicted by a Nigerian Senate committee for diverting over $100 million from an oil development fund. Years after corruption allegations against her husband surfaced, Rukaiyatu Abubakar moved more than $1 million of her husband's money through Habib Bank to a company in the United Arab Emirates to buy an apartment in Dubai. Atiku Abubakar has never been convicted and denies wrongdoing.

The Turkish 'Goldfinger' Reza Zarrab

Some, like Iranian-Turkish gold trader Reza Zarrab, appear in connection to sanctions violations. In 2017, Zarrab pled guilty to charges of fraud, money laundering and evading US sanctions on Iran before a US Federal District Court in New York. The SARs in the FinCEN Files document how he and his network transferred funds through US-based financial institutions.

In June 2016, three months after Zarrab was arrested on his way to Walt Disney World, Standard Chartered Bank filed a series of Suspicious Activity Reports on a decade of bank transactions involving Zarrab and his network.

The following October, Standard Chartered filed another report, listing $133 million worth of transactions made by entities the bank had tied to Zarrab's network.

Journalists trace the trail of money

Dozens of the stories documented during the FinCEN Files investigation trace money transfers like these, connecting foreign capital to companies that only exist on paper. The suspicious flow of money is made possible by globally operating banks, which so far appear to have felt little pressure to prevent such transfers.

Read more: From Panama to Paradise: The biggest tax evasion data leaks in history

Investigative partners contributing to the FinCEN Files include: Le Monde (France), The Indian Express, L'Espresso (Italy), Asahi Shimbun (Japan), El Espectador/CONNECTAS (Colombia), Armando.info (Venezuela), The News (Pakistan), Premium Times (Nigeria) and Inkyfada (Tunisia).

Among the broadcasters involved are ABC (Australia), BBC (UK), CBC (Canada), NBC (US), NDR and WDR (Germany), SVT (Sweden) and Yle (Finland).

Further European partners include Süddeutsche Zeitung (Germany), The Irish Times, Aftenposten (Norway), Gazeta Wyborcza (Poland), Trouw and Financieele Dagblad (Netherlands), Rise Romania, Tamedia Investigation Unit and Data Desk (Switzerland), and El Confidencial and La Sexta (Spain).

Argentina's La Nacion, Perfil and Infobae joined the collaboration as well, as did Brazil's Revista Piaui, Epoca and Poder 360. Journalists from the Organized Crime and Corruption Project (OCCRP) were integral to the project.

DW's Pelin Ünker is a member of ICIJ and contributed to the investigation from Turkey.

No comment on the source

BuzzFeed News has not commented on the identity of the source. According to the US media outlet, some of the records were gathered as part of US congressional committee investigations into Russian interference in the 2016 US presidential election. Other documents are the result of requests to FinCEN from law enforcement agencies.

In January, Natalie Mayflower Sours Edwards, a FinCEN employee, pleaded guilty to conspiring to make unauthorized disclosures of Suspicious Activity Reports. Prosecutors said the material she had disclosed appeared in approximately 12 published articles. Prosecutors did not name the publication in which the articles appeared, but the headlines and dates corresponded to articles published by BuzzFeed News.

Marc Agnifilo, who was Edwards' lawyer at the time of her January court appearance, said she had only the best intentions in disclosing the information: "She was of the opinion that certain critical facts weren't being correctly handled by the very government agencies whose responsibility it was to handle them," said Agnifilo, who no longer represents Edwards.

"She went to the media and said if I can't trust the government to handle this, I think I can trust the media to handle it and bring it to the attention of the American people."

Contributors: Will Fitzgibbon, Emilia Diaz-Struck and other ICIJ partners.