ABC told about a story of a Chinese national Jack.
Back in December 2012, Jack was struggling to find a job. He ended up into an office in Sydney’s World Square, where he met his prospective boss — a balding, middle-aged man in sandals who spoke with a heavy Cantonese accent. His name was William Cai.
“William asked me to deposit money for him. I remember I went to the office and he had bags of cash,” he says.
Jack’s new duties involved walking around Sydney’s banks depositing shopping bags filled with cash.
Detective Acting Superintendent Daniel Burnicle was head of the Australian Federal Police’s (AFP) money-laundering unit in Sydney at the time Jack was working for Cai and depositing bags of cash.
“Money remitters are able to move cash out of Australia in a matter of hours as opposed to days compared with a bank,” he says.
And Jack was using a particular money remitter, SuperForex, and a particular bank, Westpac, that had both previously been involved in one of the biggest cash seizures in the AFP’s history.
Instead of shopping bags, a woman was rolling suitcases full of cash into that same Westpac branch and depositing it into a SuperForex account.
According to the AFP, at the time about $80 million in cash was transferred out of the country by this method and never recovered. Westpac never stopped the transactions.
In October 2015, an analyst from The Bank Of New York Mellon noticed more than $20 million was heading for SuperForex’s account in China.
Drawing on a cache of secret financial intelligence reports, the investigation by more than 400 journalists globally reveals how some of the world’s biggest banks continue to move dirty money for drug cartels, corrupt regimes, arms traffickers, and other international criminals. Many of the laundering activities are linked to Chinese individuals.
The International Consortium of Investigative Journalists (ICIJ), together with BuzzFeed News and 108 other media partners in 88 countries, spent 16 months organizing and analyzing the documents, dubbed the FinCEN Files.
The documents include more than 2,100 suspicious activity reports, or SARs, filed by global banks to the United States Treasury Department’s intelligence unit, the Financial Crimes Enforcement Network.
These documents show how laundered money provides the lifeblood for corrupt authoritarian regimes and the enemies of democracy worldwide.
The sweeping, unprecedented leak shows banks moved more than $2 trillion in payments between 1999 and 2017 they themselves believed was suspicious, plus hundreds of spreadsheets, involving financial institutions with flagged clients in more than 170 countries.
An ICIJ analysis found that banks in the FinCEN files regularly processed transactions to companies registered in so-called secrecy jurisdictions and did so without knowing the ultimate owner of the account. At least 20% of the reports contained a client with an address in one of the world’s top offshore financial havens, the British Virgin Islands, where many Chinese registered their businesses.
In some cases the banks kept moving illicit funds even after U.S. officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes.
Five of the banks that appear most often in the FinCEN Files — Deutsche Bank, Bank of New York Mellon, Standard Chartered, JPMorgan and HSBC — repeatedly violated their official promises of good behavior, the secret records show.
China Investment Corporation is also among the top-10 list, with a reported amount of suspicious transactions at US$1,334,387,826.
Among those involved in alleged financial crimes and assisted by JPMorgan to move their dirty money is notorious Jho Low, the illegitimate son of Meng Jianzhu, formerly head of China’s police force.
Jho Low was accused by authorities in multiple countries of being the mastermind behind the embezzlement of more than $4.5 billion from a Malaysian economic development fund, called 1Malaysia Development Berhad, or 1MDB. He moved just over $1.2 billion through JPMorgan from 2013 to 2016, the records show.
Jho Low first gained notoriety for partying with Paris Hilton, Leonardo DiCaprio and other celebrities. One night at a club on the French Riviera, he got into a bidding war over a cache of Cristal champagne — winning the contest with a final bid of 2 million euros, according to “Billion Dollar Whale,” a bestselling book about the 1MDB swindle.
He was first outed by media reports in early 2015 as a key figure in the 1MDB scandal, the so-called “heist of the century.” Singapore issued a warrant for his arrest in April 2016. Authorities in the U.S., Malaysia and Singapore are seeking his capture.
The leaked documents reveal that JPMorgan moved more than $1 billion for the fugitive financier behind Malaysia’s 1MDB scandal, the records show, and more than $2 million for a young energy mogul’s company that has been accused of cheating Venezuela’s government and helping cause electrical blackouts that crippled large parts of the country.
In 2012, London-based HSBC, the largest bank in Europe, signed a deferred prosecution deal and admitted it had laundered at least $881 million for Latin American drug cartels. Narcotraffickers used specially shaped boxes that fit HSBC’s teller windows to drop off the huge amounts of drug money they were pushing through the financial system.
Under the deal with prosecutors, HSBC paid $1.9 billion and the government agreed to put criminal charges against the bank on hold and dismiss them after five years if HSBC kept its pledge to aggressively fight the flow of dirty money.
During that five-year probationary period, the FinCEN Files show, HSBC continued to move money for questionable characters, including suspected Russian money launderers and a Ponzi scheme under investigation in multiple countries.
In interviews with ICIJ and BuzzFeed, more than a dozen former compliance officers at HSBC called into question the effectiveness of the bank’s anti-money-laundering programs. Some said the bank didn’t give them enough time to do much beyond cursory looks at large flows of cash — and that when they requested information about who was behind big transactions, HSBC branches outside the U.S. often ignored them.
According to ICIJ, money streamed in from California, Peru, Bolivia, China and other places where low-income families were willing to sink their modest savings — $2,000, $5,000, $10,000 — into an investment they hoped would change their lives.
With the click of a keyboard, investors’ money funneled through the New York operations of global banking giant HSBC. Then it zipped across the world into accounts at HSBC’s sprawling Hong Kong offices.
The FinCEN Files show that HSBC continued shifting money for the World Capital Market (WCM) investment fund at a time when authorities in three countries were investigating the company and the bank’s internal watchdogs knew it was an alleged Ponzi scheme.
Chinese national Ming Xu promised investors 100 percent in 100 days via the sale of cloud computing software. The Ponzi scheme targeted poor communities and used Christian imagery to attract Asian and Latino families, the leaked reports reveal.
John Cassara, a financial crime expert who worked as a special agent assigned to FinCEN from 1996 to 2002, said that the size of the penalties paid by HSBC and other big banks may sound large but that they’re a tiny fraction of the banks’ profits. And the money isn’t paid by the bankers who should be held accountable, he said — it’s paid by shareholders.
HSBC stock has fallen more steeply than most big rivals this year, hitting as low as HK$29.60 on Monday, as they extended this year’s plunge to about 50%.
According to Bloomberg, HSBC now risks being caught in deepening turmoil after a swirl of trouble over the past year amid political unrest and an economic slump in its biggest market, Hong Kong. It also faces difficulties in navigating low-interest rates and surging loan losses sparked by the global pandemic.
HSBC is a possible candidate for China’s “unreliable entity list” that aims to punish firms, organizations or individuals that damage national security, the Communist Party’s Global Times newspaper reported last Saturday.
By Winnie Troppie