Remember the times when the banks, law firms and accountants used to be the most trusted institutions and a key part of the social fabric? And the day has come where in it is so hard to find a single article, news or a headline that does not have a tag line which says the opposite. Every single news read that the very same trusted institutions are now bankrupt, wealth takers who were once wealth creators, the professional enablers of the financial crime? Especially in money laundering! The charges against the banking industry is getting more and more and all these scandals have shone a bright light on the malpractices happening. But sadly there is neither an acceptance nor the denial of this problem nor an appetite to reform. But they are successful in allegedly twisting the system in their favor through successful lobbying, the mistrust and resentment that has remained after the financial crisis of 2008. Categorized as ‘economic crimes’ which are which are defined in the UK Government’s Economic Crime Plan (2019-2022) as fraud, money laundering, embezzlement, bribery, corruption and terrorist financing , all these crimes fit into a single crime. The banks are expected to have strong set of attitude to each of them differently. But the banks are acting blind. For example, there are strict rules against funding the terror attacks but at the same banks could overlook a large corporate company paying bribes in another part of the world.
The most recent FinCEN Files scandal clearly illustrated the anti-money laundering (AML) system in which the regulators have set an unenforceable rules that banks purposefully break. We can see a pattern that has emerged over the past decade of banks having prioritized commercial interests over regulatory and legal requirements. The scandals have encompassed HSBC in Mexico, Deutsche Bank in Russia, Barclays’ “elephant deal” in Qatar, Goldman Sachs in Malaysia and JPMorgan Chase clearing the funds of organized crime gangs and the list will go on. The cases look overwhelming on the banks as there are scandals after scandals. Even with the best will in the world, it is so hard to make out the scams as the dirty money when estimated by the United Kingdom’s National Crime Agency was to be £100 billion annually in the UK and by the United Nations (UN) was to be up to $2 trillion globally and this was just a drop in the ocean among all the clean money. Banks argue to have most certainly put in the resources like Citigroup’s recent annual report told the world, for example, that “Citi employed roughly 30,000 risk, regulatory and compliance staff as of year-end 2019, out of a total employee population of 200,000”. That is 15 percent of the headcount, compared to around 4 percent in 2008.
So the question arises if the banks are actually the perpetrators or the victims! It is beyond dispute that the proceeds of corruption and organized crime flow primarily through the banks’ coffers. Banks are a key part of the money-laundering chain, and to that extent, are undoubtedly facilitators and enablers. But to which extent are the banks being complicit by either processing dirty money because the returns and relationships are so lucrative and the banks are turning a blind eye towards it.
Banks viewing themselves as the victims is not going to help find a solution but them being willing to accept that they are the perpetrators might bring about some serious ways to help the society , the banks and the customers.
