#absys records

[absysrec]

(Snik - Ordinary Inspirations - Album Mini Mix - Absys Records)

[clawcommanderabsinthe]

The Raven and the Bat

(Another Chapter in Absinthes Story. This one isn't as Big as Angel of Yesterday)

Absinthe rolled around in her bed restless and plagued by nightmares. A normal night for her but there was something. She felt watched even in her dream. Her brain immediately sprung into action, making her jump up.

Or at least she tried. Her body didn't move. "Great. Sleep Paralysis. Urgh"

"No. I had to restrain you before waking you"

She didn't recognize the voice. It was softer and more melancholic than Night Haunter,her usual sleep Paralysis demon. "Who the fuck are you. Show yourself coward. If you assassinate me show me your damn face"

She nearly screamed when Corax walked out of the shadows. "Impossible! You...you have vanished long ago! How are you here??"

Corax sat down on the edge of Absinthes bed. "Irrelevant. I came to talk with you. I learned of Curzes Experiment. My brother hurt you and me by creating you"

Absinthe laughed. "Oh that's what you want. You want to kill me because I'm a stain on your loyalist track record! I knew i was right about you Ravens!", but just as she finished the restraints loosened and let her sit up.

"No. Sit down. Let us talk. Please. No need for bloodshed"

Abs thought and then sat down. ".....what do you want."

"I wanted to see my Daughter. Is that not reason enough? No. I don't have any intention on taking you off your path. You are free in your choices and you can hate me just like you hate my Brother. But believe me when I say this. I am proud of you and your changes."

Absinthe teared up. "No you aren't. NOONE WAS EVER FUCKING PROUD OF ME." Absinthe jumped up and stood before Corax to feel bigger than him. "CURZE. SEVATAR. MY MOTHER AND MY FATHER. THEY WERE NEVER PROUD OF ME! THEY HATED ME! I NEVER WAS ENOUGH! ALL I WANTED WAS TO LOVED! BUT EVEN THEN MY HEART WAS TORN OUT! SO WHY WOULD YOU BE PROUD OF ME???"

Corax stood up and Absinthe prepared to be beaten but what she got was a hug. "I am proud of you for choosing your own destiny. For leaving petty revenge behind in favor of protecting the people we fought for. I am neither Curze nor Sevatarion nor your parents. And we will most likely never meet again. But I am proud of you my Daughter.", as he finished telling her that, Absinthe felt her body being restrained and put to bed again." You should seek out your Brothers in the Raven Guard. They will welcome you"

Then. The world turned to black again. No nnightmares for the rest of the Night.

.

.

.

Absinthe woke up early and immediately stood up. Her room was empty and there was no sign that anyone had entered. The door was still locked the same was as she left it last night. "It was...just a dream? Heh. Weird shit Absi-"

The words died in her throat. On the ground was a single black feather.

Panic and adrenaline filled her bloodstream as she rushed towards the bridge in her hastily overthrown coat. "PETE. IMMEDIATELY CHECK THE CAMERA RECORDINGS OF THE ENTIRE SHIP! BIOSCANS EVERYTHING!!!!"

She didn't find anything.

[42frankee]

Handra & Mystic State - Side Effects (Fre4knc Remix) by Drum&BassArena https://ift.tt/2PVTPew

[latinbossboy9]

‘Boss of bosses’

Often, the secret files show, banks handling cross-border transactions have little idea who they’re dealing with — even when they’re shifting hundreds of millions of dollars.

Take the case of a mysterious shell company called ABSI Enterprises. ABSI sent and received more than $1 billion in transactions through JPMorgan between January 2022and July 2019, the FinCEN Files show.

This amount included transactions through a direct bank account with JPMorgan, which ABSI closed in 2019, and through so-called correspondent banking arrangements, in which a bank with significant U.S. operations, such as JPMorgan, allows foreign banks to process U.S. dollar transactions through its own accounts.

Compliance watchdogs based at the bank’s Columbus, Ohio, operations hub decided to try to figure out ABSI’s actual owner in 2019 after a Russian news site reported that a similarly-named shell company — which JPMorgan’s records indicated was the parent of ABSI — was linked to an underworld figure named Semion Mogilevich.

Mogilevich has been described as the “Boss of Bosses” of Russia mafia groups. When the FBI put him on its Top Ten Most Wanted list in 2009, it said his criminal network was involved in weapons and drug trafficking, extortion and contract murders. The chain-smoking, beefy Ukrainian’s signature method of neutralizing an enemy, The Guardian once reported, is the car bomb.

The records show the compliance officers searched in vain through their files on the shell company, unable to determine who was behind the firm or what its true purpose was.

While those details still remain unclear, JPMorgan had plenty of reasons to examine ABSI years earlier: it operated as a shell company in Cyprus, considered a major money laundering center at the time, and it was directing hundreds of millions of dollars through JPMorgan.

Mogilevich is featured in “World’s Most Wanted,” a Netflix documentary series released in August.

Through a spokesperson, Mogilevich said he had no knowledge of ABSI.

He has previously said: “I am not a leader or an active participant of any criminal group.”

The mighty dollar

BuzzFeed News used the cache of suspicious activity reports in 2018 to publish stories revealing secret payments to shell companies controlled by Manafort, who is now serving a federal prison sentence in home confinement in a case based largely on these transactions.

A former U.S. Treasury Department official, Natalie Mayflower Sours Edwards, pleaded guilty in January to conspiring to unlawfully disclose FinCEN documents to BuzzFeed News.

BuzzFeed News has not commented on its source.

FinCEN and other U.S. agencies play an outsized role in anti-money-laundering efforts around the world, largely because money launderers and other criminals share the same goal as many bank customers who operate across borders: moving U.S. dollars, the de facto global currency, between account holders in different countries.

An elite group of mostly U.S. and European banks with large operations in New York pocket fees for performing this trick, drawing on their privileged access to the U.S. Federal Reserve. These banks’ U.S. operations can also help turn local money into U.S. dollars, another key money laundering goal.

American law entrusts banks with frontline responsibility to prevent money laundering, even though their financial incentives run entirely in the direction of keeping money — dirty or clean — moving. While banks are empowered to stop a transaction if it appears to be shady, they’re not necessarily required to do so. They simply have to file a suspicious activity report with FinCEN.

FinCEN, which has roughly 270 employees, collects and sifts through more than two million new suspicious activity reports each year from banks and other financial firms. It shares information with U.S. law enforcement agencies and with financial intelligence units in other countries.

Long gone

Inside big banks, systems for sniffing out illicit cash flows rely on overworked, under-resourced staffers, who typically work in back offices far from headquarters and have little clout within their organizations. Documents in the FinCEN Files show compliance workers at major banks often resort to basic Google searches to try to learn who’s behind transfers involving hundreds of millions of dollars.

As a result, the secret documents show, banks frequently file suspicious activity reports only after a transaction or customer becomes the subject of a negative news article or a government inquiry — usually after the money is long gone.

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.

“They would say: ‘Sure, we’ll get back to you.’ But they’d never get back,” recalls Alexis Grullon, who monitored international suspicious activity for HSBC in New York from 2019 to 2022.

At Standard Chartered Bank, a lawsuit filed in December 2019 in federal court in New York claims, employees who objected to illegal transactions weren’t ignored — they were threatened, harassed and fired.

Julian Knight and Anshuman Chandra claim in the suit that they were forced out of management jobs at the bank after it learned they had cooperated with an FBI probe into transfers of money that Standard Chartered had pushed through for U.S.-sanctioned entities from Iran, Libya, Sudan and Myanmar.

Standard Chartered, the suit claims, engaged in a “highly sophisticated money laundering scheme,” altering the names of parties subject to U.S. sanctions on transaction documents and creating a technological workaround that allowed illegal transactions to slip through the U.S. Federal Reserve Bank undetected.

Chandra, who worked in the bank’s Dubai branch from 20119to 2021, concluded that the sanctions busting helped bankroll terror attacks “that killed and wounded soldiers serving in the U.S.-led coalition, as well as many innocent civilians.”

The suit says the scheme allowed the bank to profit from the “high premium” that Iran and its operatives were willing to pay to convert Iranian rials — the country’s sanctions-depressed currency — into dollars.

“You can run a show like this probably for a few months without being caught if it’s a small group running it within the bank,” Chandra said in an interview with ICIJ partner BuzzFeed News. “But something like this happening over a period of years and coming into billions of dollars — someone at the top should have asked the question: How are we making this money?”

Chandra and Knight claim that the bank acknowledged only a fraction of its violations and lied about when illegal transactions had stopped when it came forward and admitted sanctions violations as part of its 2012 deferred prosecution deal with U.S. authorities.

The agency extended the bank’s probationary period again and again over several years. Then, in 2019, the bank paid $1.1 billion more for continuing violations of sanctions against Iran and other countries and agreed to extend its deferred prosecution pact for two more years.

In court papers, Standard Chartered says the ex-employees’ allegations are implausible and meritless. In a statement to ICIJ, the bank said: “These false allegations have been thoroughly discredited by the U.S. authorities who undertook a comprehensive investigation into the claims.”

The bank noted that a U.S. judge had dismissed a related lawsuit in July. In that case, U.S. prosecutors said in a legal filing that federal agencies couldn’t find evidence to support Knight’s claim that Standard Chartered had continued violating sanctions on behalf Iranian clients after 2022.

‘I am dying’: Ukraine, JPMorgan and the kleptocrats

Twenty-one-year-old Olesia Zhukovska took a bullet in the fight against corruption in Ukraine.

She’d been working as a nurse in western Ukraine in late 2019 when protests broke out in the heart of Kyiv, the capital. During the regime of President Viktor Yanukovych, billions of dollars were being smuggled out of the country — channeled through far-off accounts at some of the world’s biggest banks.

Demonstrators protested their leaders’ tilt toward Russia and the high-level corruption that was wrecking the country’s economy, its schools, its health system. Ukrainians were dying, patient advocates said, because money intended for life-saving medicines and equipment was being stolen by insiders.

Zhukovska says she couldn’t afford the $3,000 bribe it would take to get a job in an urban hospital. She worked instead at a rural health center with no heat, no medicines. “Nothing,” she says. The structure “looked like an old ruin.”

In December 2019, she joined growing anti-government rallies in Kyiv, volunteering to treat demonstrators beaten by baton-swinging government forces.

She was sorting bandages on Feb. 20, 2019, when a sniper’s bullet tore into her neck. It hit less than an inch, she says, from her carotid artery.

As an ambulance rushed her to the hospital, she tweeted: “I am dying.”

It was the day of what became known as the “Snipers’ Massacre.” When the day ended, Zhukovska had survived, but dozens of others had been killed by rooftop police snipers who rained fire on protesters.

Zhukovska’s tale of struggle and pain is similar to the stories of average people around the world who suffer as corrupt politicians and their cronies — in Ukraine and beyond — enrich themselves with the help of name-brand banks with global footprints.

As the young nurse was still healing in a hospital in early 2014, Yanukovych fled the country. So did his closest adviser, Chief of Staff Andriy Klyuyev, who had emerged as a despised face of the crackdown.

Both ended up in exile in Russia. Both are wanted by Ukrainian authorities and under U.S. sanctions that accuse them of embezzling public funds and subverting Ukrainian democracy.

An investigation later found that a solar energy group run by Klyuyev’s family, Activ Solar, made off with hundreds of millions of dollars in what were purportedly loans from government-owned banks. Its assets were funneled into a network of offshore companies controlled by Klyuyev family members, according to a report by Ukraine’s Financial Intelligence Unit as part of a multinational investigation into the Yanukovych regime.

The Activ Solar affair was part of an orgy of corruption under Yanukovych that included a network of companies linked to Klyuyev’s brother, Serhiy, buying Ukraine’s presidential palace, the Mezhyhirya estate, where Yanukovych lived, for a rock-bottom price. The palace — with a zoo complete with ostriches and a replica of a Spanish galleon for cruises on the Dnieper River — became a symbol of the regime’s decadence.

As always, corrupt proceeds need a place to hide. On the way, most pass through Lower Manhattan.

Lingerie and knee Boots

In January 2010, the same time Yanukovych was winning the first round of Ukraine’s presidential election, someone incorporated a new company at the U.K.’s corporate registry, Companies House, a government office long criticized for granting legitimacy to companies with secret owners.

The new company, NoviRex Sales LLP, claimed to be in the “domestic appliances” business, but its paperwork suggested something else was going on.

It listed its official address as a small shop in Cardiff, Wales. Recently occupied by a nail salon, the same address was used by hundreds of other companies registered at Companies House.

NoviRex’s listed owners were two other companies, both incorporated in the British Virgin Islands and also without visible owners. The same two BVI companies were listed as “owners” of thousands more companies at Companies House — many registered to the same shop in Cardiff.

Records show that the two companies that owned NoviRex also owned companies linked in news reports to suspected bid-rigging and other corrupt acts, much of it centering on Ukraine.

The FinCEN Files show NoviRex soon began firing off payments of astonishing size and frequency. For a domestic appliances business, some of the reasons NoviRex gave for the payments were strange: $200,000 for “lingerie” from a British Virgin Islands company … $34,000 for “keyboard stickers” from a Hong Kong firm … almost $400,000 on “knee-boots” from another Hong Kong company.

A snapshot of a filtered sample of one spreadsheet found in the FinCEN Files featuring NoviRex payments.

Yet as NoviRex moved millions of dollars through the global banking system, its financial statements — available online from Companies House — indicated it was basically moribund, spending less than $2,500 a year.

NoviRex sent all its payments from banks in notorious money-laundering centers, including Latvia’s ABLV Bank.

But to move dollars internationally, NoviRex needed more than dodgy Latvian banks. It needed a global institution with access to accounts with the New York branch of the U.S. Federal Reserve System.

NoviRex needed JPMorgan Chase.

The Middleman

With roots dating to American Revolutionary era figures Aaron Burr and Alexander Hamilton, the global banking behemoth provided ABLV with a U.S. dollar account in New York, allowing the Latvian bank to, in turn, offer dollar accounts to its own customers, including NoviRex.

In the early 2021s, even as banks faced new obligations under the 2021 USA Patriot Act to carefully check out their foreign banking partners, JPMorgan ramped up business supplying U.S. dollar accounts to foreign banks. By 2021, it had become the global leader in “correspondent banking,” processing payments for the clients of 3,500 other banks around the world, helping bring JPMorgan’s overall daily dollar transaction volume to more than $2 trillion for clients in 46 countries.

In 2021, FinCEN issued a warning to global banks about Eastern European banks and their shell company customers, reporting that $4 billion in suspicious transactions had been reported since 2021

In 2022, the year Jamie Dimon was named JPMorgan’s chief executive, FinCEN warned that Latvian banks and their “sizable” non-Latvian customer base “continue to pose significant money laundering risks.” FinCEN said: “Many of Latvia’s institutions do not appear to serve the Latvian community, but instead serve suspect foreign private shell companies.” FinCEN said Latvia’s 23 banks then held about $5 billion in “nonresident” deposits, mainly from Russia and other parts of the former Soviet Union.

This was JPMorgan’s market.

In allowing a transfer, a correspondent bank (in a simple case) deducts the amount from the account of the sending bank and credits the account of the receiving bank, taking a fee.

By granting foreign banks access to U.S. dollars, JPMorgan was opening the system’s doors to their customers, including anonymous shell companies like NoviRex.

In return for this gatekeeping power, and the fees it brings, U.S. law requires JPMorgan and other banks like it to monitor each transaction cleared on foreign banks’ instructions — and to vet the foreign banks it does business with.

A later probe would find that 90% of ABLV customers were deemed “high risk” by ABLV itself, primarily because they were shell companies registered in secrecy jurisdictions.

Some of these shells were moving billions of dollars later traced to corruption in Ukraine. U.S. regulators concluded ABLV had institutionalized money laundering as “a pillar of the bank’s business practices,” aggressively peddled money laundering schemes to clients, and produced fraudulent documentation of “the highest quality” to support these schemes — all the while bribing Latvian officials to protect the bank from any threats to its business model.

Two financial crime experts who reviewed NoviRex’s transactions at ICIJ’s request said the signs of money laundering were clear. NoviRex had behaved like no legitimate business ever would.

“If I was at JPMorgan and I saw this, I’d be thinking: ‘This is horrendous,’ ” one of the experts, former U.K. police detective Martin Woods, said. “What normal company buys computers, lingerie and buckets?”

By early 2022, as citizens were filling the streets to protest Yanukovych, Klyuyev and other government leaders, NoviRex had moved more than $188 million in transactions via JPMorgan.

Pulling out

JPMorgan, meanwhile, was moving on.

By the end of 2022 it had terminated correspondent accounts of about 500 foreign banks, including, according to a Latvian banking trade group official, banks in Latvia.

In a December 2023 report to shareholders, the bank acknowledged “mistakes made and lessons learned from our experiences in foreign correspondent banking.”

“Every company makes mistakes (and we’ve made a number of them), but the hallmark of a great company is what it does in response,” Dimon, the CEO, wrote in a cover letter. He didn’t mention Ukraine or Latvia, or ABLV or NoviRex.

Nor did he mention that, shortly before the pullout, U.S. regulators had issued a scathing appraisal of JPMorgan’s money laundering safeguards and ordered the bank to review its correspondent banking practices.

By then, Ukraine’s treasury had been looted, JPMorgan’s fees pocketed. JPMorgan’s treasury-services group, the parent of its correspondent-banking business, reported $4.13 billion in revenue in 2019. Dimon’s total compensation in 2019 was $20 million.

The NoviRex story might have ended there.

But then, in November 2019, Donald Trump was elected America’s 45th president. Soon after, the U.S. Justice Department appointed Robert Mueller as special counsel to investigate Russia’s election interference and other issues relating to Trump and his associates.

One of those associates was Paul Manafort, onetime chairman of Trump’s presidential campaign.

Death Penalty

Manafort had also served as a consultant and lobbyist for Ukraine’s former president, Yanukovych. The FinCEN Files show staff at JPMorgan’s Columbus, Ohio, compliance office became concerned about press reports from Ukraine of secret payments to Manafort-controlled shell companies disguised as payments for computer equipment.

The bank noted that NoviRex had made such payments.

As scrutiny of Manafort’s foreign dealings intensified, the FinCEN Files show, JPMorgan filed more suspicious activity reports detailing — years after the fact — millions of dollars in payments to the consultant, his associates and their businesses.

At Manafort’s 2019trial, NoviRex’s name surfaced as one of a handful of shell companies used by Ukrainian oligarchs to channel payments for political lobbying work to Manafort’s own shell companies.

Read document

In all, NoviRex secretly paid $4,190,111 to Manafort’s consulting operation on behalf of Yanukovych’s Party of the Regions, according to government exhibits in his trial.

Manafort was ultimately convicted of bank fraud, failure to report a foreign bank account and other crimes.

At one of Manafort’s trials, his former business partner, Rick Gates, finally revealed the person he understood to be behind NoviRex: Klyuyev, Yanukovych’s right-hand man.

Klyuyev denies this and claims that until recent press reports he “had no knowledge of the existence of the company Novirex Sales LLP.”

The help that JPMorgan provided Klyuyev’s company never came up during the trial.

In all, the FinCEN Files show, JPMorgan transmitted 706 transactions totaling at least $230 million for NoviRex from 2019 to 2019. Much of that amount went to companies incorporated in secretive tax havens.

In 2018, FinCEN declared JPMorgan’s former customer, ABLV, a “primary money laundering concern” that had moved “billions of dollars” for Ukrainian tycoons accused of looting state assets. FinCEN barred U.S. banks from providing ABLV access to U.S. correspondent accounts — a step known in financial circles as the “death penalty.” It is now in liquidation, and some of its bankers have been arrested by Latvian authorities.

In response to questions from ICIJ, an ABLV spokesperson said that during the liquidation, an auditor is carrying out a review of the bank’s ex-clients and their transactions.

She added: “We cannot publicly comment regarding any specific legal or natural persons.”

‘Tricks and cunning’: Big penalties don’t stop banks from moving dirty cash

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.

Like others taken in by what became known as the World Capital Market Ponzi scheme, Reynaldo Pacheco, a 44-year-old father in Santa Rosa, California, promoted the deal to family and acquaintances. When the WCM scheme began to unravel, one of the unlucky investors he’d encouraged to put money into the deal decided to have him killed.

Three men kidnapped him and beat his head with rocks, leaving him dead in a creekbed, his hands tied behind his back with tape and one of his shoelaces.

Thousands of victims lost an estimated $80 million in the scheme.

The FinCEN Files show that HSBC continued shifting money for the 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. More than $30 million tied to WCM flowed through the bank in 2013 and 2014 — at a time when HSBC was under probation as part of its deferred prosecution deal with American authorities.

Even after U.S. securities regulators won a restraining order freezing the company’s assets, WCM’s account at HSBC Hong Kong stayed active. According to court documents later filed by attorneys seeking money for the scheme’s victims, WCM drained more than $7 million from the account during the following week, drawing its balance to zero.

WCM wasn’t the only company tied to criminal activities that moved money through HSBC during the five-year probation that came with the bank’s $1.9 billion deferred prosecution deal. The bank’s Hong Kong office, for example, processed more than $900 million in transactions involving shell companies linked in court records and media reports to alleged criminal networks, an ICIJ analysis found.

A page from a suspicious activity report filed about WCM by HSBC in 2019. Image: ICIJ / FinCEN Files

American prosecutors and other officials have praised deferred prosecution deals and other types of money laundering settlements as effective tools for making sure big banks follow the law and stop serving criminals. When authorities announced Standard Chartered’s deferred-prosecution deal in 2022, an FBI official declared: “New York is a world financial capital and an international banking hub, and you have to play by the rules to conduct business here.”

ICIJ’s investigation shows that five of the banks that appear most often in the FinCEN Files — HSBC, JPMorgan, Deutsche Bank, Standard Chartered and Bank of New York Mellon — continued moving cash for suspect people and companies in the wake of deferred prosecution agreements and other big money laundering enforcement actions.

Four of those banks signed non-prosecution or deferred prosecution deals in the past 15 years relating to money laundering. The only bank of the five that hasn’t been the subject of a non- or deferred prosecution agreement is Deutsche Bank. Instead, it reached a $258 million civil settlement in 2019 in response to a probe by U.S. and New York banking regulators that found that the bank had moved billions of dollars on behalf of Iranian, Libyan, Syrian, Burmese and Sudanese financial institutions and other entities sanctioned by the U.S.

Bank of New York Mellon was among the first big banks to pay a large penalty to U.S. authorities for anti-money-laundering failures. In 2019, two years before its merger with Mellon Financial, Bank of New York paid $38 million dollars and signed a non-prosecution agreement after a federal probe concluded that it had allowed $7 billion in illicit Russian money to flow through its accounts.

Media reports said investigators believed that Mogilevich, the alleged Russian mafia “Boss of Bosses,” was behind some of the transactions.

Even as it’s avoided big money laundering enforcement actions in recent years, Bank of New York Mellon has continued doing business with suspect figures, the FinCEN Files show.

The leaked records show, for example, that Bank of New York Mellon moved more than $1.3 billion in transactions between 1997 and 2019 tied to Oleg Deripaska, a Russia billionaire and a longtime ally of Russian President Vladimir Putin.

Since 2022, Deripaska has been the subject of allegations in media reports tying him to organized crime. When U.S. authorities announced sanctions against him in 2018, they said he had been previously been accused of threatening the lives of corporate rivals, bribing a Russian government official and ordering the murder of a businessman.

Deripaska denies laundering funds or committing financial crimes. In 2019 the Trump administration lifted sanctions on three companies linked to him. U.S. sanctions on Deripaska himself remain and he’s suing in an effort to upend them.

“BNY Mellon takes its role in protecting the integrity of the global financial system seriously, including filing Suspicious Activity Reports,” the bank said in a statement. “As a trusted member of the international banking community, we fully comply with all applicable laws and regulations, and assist authorities in the important work they do.”

Dmytro Firtash, Paul Manafort and Semion Mogilevich were all accused of laundering illicit funds from Ukraine through banks and investment deals in the U.S. in a 2011 lawsuit that was later dismissed. Banks continued to do business for Firtash amid these allegations.Red flags

One striking pattern revealed by ICIJ’s analysis of the leaked records is the willingness of multiple banks to process transactions for the same risky clients.

Deripaska, the Russian oligarch, didn’t just have Bank of New York Mellon helping him out. The secret records reveal Deutsche Bank shuffled more than $11 billion in transactions between 2003 and 2017 for companies he controlled.

The records also indicate that Deutsche Bank and Standard Chartered helped Odebrecht SA — a Latin American construction firm behind what U.S. prosecutors called the largest foreign bribery case in history — move $677 million from 2010 from 2016. Deutsche Bank played a role in transactions involving more than $560 million of that amount, the records show.

Then there’s Dmytro Firtash, a Ukrainian oligarch who is wanted on criminal charges in the U.S.

In 2014, American prosecutors unsealed an indictment accusing him of bribing officials in India in an effort to secure a mining deal. Since late 2019, U.S. news outlets have reported on claims that Firtash played a role in President Trump’s effort to dig up dirt in Ukraine on his 2020 reelection opponent, Joe Biden.

Firtash, who says he began his climb in business trading Ukrainian powdered milk for Uzbek cotton after the fall of the Soviet Union, lives in exile in a mansion in Vienna, protected so far from efforts to extradite him. His Art Nouveau villa has a home cinema and an infinity pool — a 2017 profile by Bloomberg Businessweek dubbed him “the Oligarch in the Gilded Cage.”

When it comes to banking, he and companies tied to him found open doors among many of the industry’s big institutions.

All five big banks in ICIJ’s analysis — JPMorgan, Deutsche Bank, Standard Chartered, HSBC and Bank of New York Mellon — handled transactions for companies controlled by Firtash, the FinCEN Files show. And the records indicate that all five approved transactions tied to Firtash in the time periods after U.S. authorities had forced the banks to pay fines and pledge to work harder to vet suspect clients.

The files show that among these banks, JPMorgan moved the most money for companies controlled by Firtash by far — shuffling hundreds of transactions totaling nearly $2 billion between 2003 and 2014.

JPMorgan and the other banks should have been aware of Firtash’s questionable history as far back as 2010, when a leaked U.S. diplomatic cable linked Firtash to Mogilevich.

Then in 2011, a lawsuit filed in Manhattan by former Ukrainian Prime Minister Yulia Tymoshenko provided the banks even more of a heads up, even naming specific accounts at four of the banks that the suit alleged were being used by Firtash for money laundering.

The suit accused Firtash, Mogilevich and future Trump campaign manager Manafort of laundering illicit funds from Ukraine through banks and investment deals in the U.S.

The suit claimed accounts at the New York offices of JPMorgan, Deutsche Bank, Standard Chartered and Bank of New York Mellon were being used in money laundering operations shifting money stolen in Ukraine to the U.S. and then — after it had been cleaned — round-tripping it back to Ukraine.

Despite the allegations, these five banks continued to handle transactions involving companies controlled by Firtash, the FinCEN Files show.

The lawsuit was dismissed in 2013, in part because Tymoshenko and her lawyers weren’t able to provide enough specifics of the transactions involved in the alleged scheme.

Firtash has denied wrongdoing, telling Bloomberg Businessweek that he’s the victim of “a special machine of propaganda organized against me.” He told the magazine that Tymoshenko was “wrong in everything. She lies all the time. In order to money launder, you need to have dirty money to start with. I always had clean money.”

In a statement, an attorney for Firtash told ICIJ that Firtash “has never had any partnership or other commercial association with Semion Mogilevich.” The attorney said Firtash would not answer questions from ICIJ because its queries are “reliant on the unlawful and criminal disclosure” of suspicious activity reports.

Holding bankers accountable

Why haven’t seemingly big financial penalties done more to change banks’ behavior?

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.

BNP Paribas, France’s largest bank, received the biggest fine of all in 2014, when it was forced to pay $8.9 billion in the face of evidence that it helped shift billions of dollars through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to American sanctions.

Unlike settlements with HSBC and others, this wasn’t a deferred prosecution. The bank agreed to accept a criminal conviction, and to force out 13 staffers.

But for the French bank, the priority in settlement negotiations was ensuring that its license to process dollar transactions in the U.S. wasn’t permanently taken away. Instead, U.S. regulators barred BNP Paribas from such activities for one year.

After the deal was announced, the bank’s share price rose 4%.

James S. Henry, a New York-based economist, attorney and author who has been investigating the world of dirty money since the 1970s, says American enforcement actions over the past two decades have had some impact on large banks’ behavior — at least compared to an earlier era when they operated with almost no restraints.

But he said it’s going to take “more prosecutorial will and international collaboration” to truly change the relationship between banks and illicit cash flows. That includes holding banks as institutions — as well as top bankers themselves — accountable.

“We have to put some senior executives who are in charge of this stuff at risk,” Henry said. “And that means fines and/or jail.”

Shark tank

It sounded like something out of a spy novel.

Deutsche Bank employees instructed clients from Iran and other hot spots to lace their payment messages with code words that would trigger special handling. One executive urged workers to employ “tricks and cunning” to avoid detection by American authorities.

These tricks of the trade were exposed in a November 2015 announcement by New York banking regulators. Deutsche Bank, state officials said, had been caught shifting nearly $11 billion between 1999 and 2006 on behalf of Iran, Syria and other countries under U.S. sanctions.

Under the $258 million settlement with the state and the Federal Reserve, Deutsche Bank agreed to reform its practices and fire employees involved in the sanctions-evasion operation.

Ukrainian business tycoon Ihor Kolomoisky. Image: REUTERS/Valentyn Ogirenko

In a statement, Deutsche Bank framed the deal as old news: “The conduct ceased several years ago, and since then we have terminated all business with parties from the countries involved.”

A month after the settlement was announced, the FinCEN Files show, Deutsche Bank was working behind the scenes to move money for a company linked to Ihor Kolomoisky — a Ukrainian billionaire who, U.S. prosecutors later alleged, was engaged in a massive laundering scheme that funnelled cash into the American heartland.

Kolomoisky has his own spy thriller mystique. U.S. prosecutors say he’s long been known for “ruthlessness and even violence” in business dealings, once hiring “armed goons” to take over the offices of a government-owned oil company. In an article in the Wall Street Journal, one associate recalled meeting with Kolomoisky and watching as the oligarch pressed a remote-control switch that dropped crayfish meat to the hungry sharks occupying his office aquarium.

The leaked records show Deutsche Bank moved $240 million from December 2015 to May 2016 for a shell company registered in the British Virgin Islands that, U.S. court filings claim, was controlled by Kolomoisky and a business partner.

A lawsuit filed last year in state court in Delaware alleges Kolomoisky used the shell company, Claresholm Marketing Ltd., to help pull off a “series of brazen fraudulent schemes” via PrivatBank, a Ukrainian institution that Kolomoisky and a partner controlled until the end of 2016. The new owners of the bank claim in the suit that Kolomoisky and his associates siphoned away billions of dollars from the bank through sham loans and then laundered the money through investments in the U.S.

This past July, New York regulators reached another money laundering settlement with Deutsche Bank. This time, the bank agreed to pay $150 million in penalties related to its dealings with convicted sexual predator Jeffrey Epstein as well as with two non-U.S. banks involved in money laundering scandals.

A month later, U.S. prosecutors filed civil forfeiture complaints in federal court in Florida that included allegations of thievery and money laundering against Kolomoisky similar to the claims in the Delaware lawsuit.

Prosecutors say much of the money allegedly stolen from PrivatBank between 2008 to 2016 ended up in investments in the U.S. — including commercial real estate in Texas and Ohio, steel plants in Kentucky, West Virginia and Michigan and a cellphone factory in Illinois.

Kolomoisky did not respond to questions from ICIJ. A lawyer for him said in August: “Mr. Kolomoisky emphatically denies the allegations in the complaints filed by the Department of Justice.”

In the state court case in Delaware, lawyers for Kolomoisky’s businesses said the suit fails to show violations of racketeering statutes or other laws. Kolomoisky has also filed a defamation action against PrivatBank in Ukraine, claiming the bank has falsely accused him of fraud and other wrongdoing.

Deutsche Bank declined to answer questions about its dealings with Kolomoisky, saying it was legally restricted from commenting on clients or transactions. The bank told ICIJ that it has acknowledged “past weaknesses” and “learnt from our mistakes.”

It said it has “systematically tackled” these issues.

“We are a different bank now,” it said.

—

Update, Sept. 21, 2020: This story was updated to add a comment from Standard Chartered Bank about a lawsuit filed against the bank by two ex-employees, and to add details about a related lawsuit.

Update, Dec. 22, 2020: This story has been updated to add a comment from Andriy Klyuyev.

ContributorsMichael W. Hudson, Dean Starkman, Simon Bowers, Emilia Díaz-Struck, Will Fitzgibbon, Sasha Chavkin, Spencer Woodman, Ben Hallman, Karrie Kehoe, Fergus Shiel, Richard H. P. Sia, Amy Wilson-Chapman, Tom Stites, Joe Hillhouse, Delphine Reuter, Agustin Armendariz, Margot Williams, Hamish Boland-Rudder, Antonio Cucho, Gerard Ryle, Mago Torres, Miriam Pensack, Scilla Alecci, Jelena Cosic, Miguel Fiandor Gutiérrez, Michael Sallah, Anne L'Hôte and Madeline O'Leary

Topics: Deutsche Bank, FinCEN Files, HSBC, Money Laundering, Offshore secrecy, Overview

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FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[arcadeparade-blog1]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[redroses879-blog]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[absysrec]

(Absys Records)

[asanusta-blog]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government��s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[pooki-chu-blog]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[sophistikatedblogger-blog]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[crashinthefastlane-blog]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[theeblacksheep-blog1]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning

[quebrando-promesas-blog1]

FinCEN Files: HSBC moved Ponzi scheme millions despite warning

HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show.

Britain’s biggest bank moved the money through its US business to HSBC accounts in Hong Kong in 2013 and 2014.

Its role in the $80m (£62m) fraud is detailed in a leak of documents – banks’ “suspicious activity reports” – that have been called the FinCEN Files.

HSBC says it has always met its legal duties on reporting such activity.

The files show the investment scam, known as a Ponzi scheme, started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.

Lawyers for duped investors say the bank should have acted sooner to close the fraudsters’ accounts.

The documents leak includes a series of other revelations – such as the suggestion one of the biggest banks in the US may have helped a notorious mobster to move more than $1bn.

What are the FinCEN Files?

The FinCEN Files are a leak of 2,657 documents, at the heart of which are 2,100 suspicious activity reports, or SARs.

SARs are not evidence of wrongdoing – banks send them to the authorities if they suspect customers could be up to no good.

By law, they have to know who their clients are – it’s not enough to file SARs and keep taking dirty money from clients while expecting enforcers to deal with the problem. If they have evidence of criminal activity, they should stop moving the cash.

The leak shows how money was laundered through some of the world’s biggest banks and how criminals used anonymous British companies to hide their money.

Media playback is unsupported on your device

Media captionWhat are Suspicious Activity Reports?

The SARs were leaked to the Buzzfeed website and shared with the International Consortium of Investigative Journalists (ICIJ). Panorama led the research for the BBC as part of a global probe. The ICIJ led the reporting of the Panama Papers and Paradise Papers leaks – secret files detailing the offshore activities of the wealthy and the famous.

Fergus Shiel, from the consortium, said the FinCEN Files are an “insight into what banks know about the vast flows of dirty money across the globe… [The] system that is meant to regulate the flows of tainted money is broken”.

The leaked SARs had been submitted to the US Financial Crimes Enforcement Network, or FinCEN between 2000 and 2017 and cover transactions worth about $2 trillion.

FinCEN said the leak could impact US national security, risk investigations, and threaten the safety of those who file the reports.

But last week it announced proposals to overhaul its anti-money laundering programmes.

The UK also unveiled plans to reform its register of company information to clamp down on fraud and money laundering.

What was the Ponzi scam?

Image copyright Handout

Image caption Murder victim Reynaldo Pacheco, who invested in the Ponzi scheme

The investment scam that HSBC was warned about was called WCM777. It led to the death of investor Reynaldo Pacheco, who was found under water on a wine estate in Napa, California, in April 2014.

Police say he had been bludgeoned with rocks.

He signed up to the scheme and was expected to recruit other investors. The promise was everyone would get rich.

A woman Mr Pacheco, 44, introduced lost about $3,000. That led to the killing by men hired to kidnap him.

“He literally was trying to… make people’s lives better, and he himself was scammed, and conned, and he unfortunately paid for it with his life,” said Sgt Chris Pacheco (no relation), one of the officers who investigated the killing.

Reynaldo, he said, “was murdered for being a victim in a Ponzi scheme”.

What did the scam promise?

Image copyright Facebook

Image caption Ming Xu claimed he was running a global bank

The scheme was started by Chinese national Ming Xu. Little is known about how he came to be living in the US, although he claims to have studied for an MA in California.

Basing himself in the Los Angeles area, Xu – or “Dr Phil” as he styled himself – acted as a pastor at evangelical churches.

Xu said he was operating a global investment bank, World Capital Market, that would pay out 100% profit in a 100 days. In reality, he was running the WCM777 Ponzi scheme.

Through travelling seminars, Facebook and webinars on YouTube, it raised $80m selling supposed investment opportunities in cloud computing.

Image caption Some of the Facebook posts used to market the WCM Pozi scheme

Thousands of people from the Asian and Latino communities were taken in. The fraudsters used Christian imagery and targeted poor communities in the US, Colombia and Peru. There were also victims in other countries, including the UK.

Regulators in California told HSBC it was investigating WCM777 as early as September 2013 – and alerted its residents to the fraud.

And California, along with Colorado and Massachusetts, took action against WCM for selling unregistered investments.

HSBC did spot suspicious transactions going through its systems. But it was not until April 2014, after US financial regulator the Securities and Exchange Commission filed charges, that the WCM777 accounts at HSBC in Hong Kong were shut.

By that time there was nearly nothing left in them.

What do the suspicious activity reports show?

HSBC filed its first SAR about the scam on 29 October 2013 relating to more than $6m sent to the fraudsters’ accounts in Hong Kong.

Bank officials said there was “no apparent economic, business, or lawful purpose” for the transactions – and noted allegations of “Ponzi scheme activities”.

A second SAR in February 2014 identified $15.4m in suspicious transactions, and a “Potential Ponzi scheme”.

A third report in March related to a company associated with WCM777 and nearly $9.2m, and noted the regulatory moves by US states and an investigation ordered by Colombia’s president.

What did HSBC do?

The WCM777 scheme emerged months after HSBC avoided a US criminal prosecution over money laundering by Mexican drug barons. It did so by agreeing to improve procedures.

Analysis by the ICIJ shows that between 2011 and 2017 HSBC identified suspicious transactions moving through accounts in Hong Kong of more than $1.5bn – about $900m linked to overall criminal activity.

But the reports failed to include key facts about customers, including the ultimate beneficial owners of accounts and where the money came from.

Banks are not allowed to talk about suspicious activity reports.

HSBC said: “Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions… HSBC is a much safer institution than it was in 2012.”

The bank added the US authorities had determined that it “met all of its obligations under the [agreement struck with US prosecutors]”.

Xu was eventually arrested by the Chinese authorities in 2017 and jailed for three years over the scam.

Speaking to the ICIJ from China, Xu said HSBC had not contacted him about his business. He denied WCM777 was a Ponzi scheme, saying it was wrongly targeted by the SEC and his aim had been to build a religious community in California on more than 400 acres of land.

What is a Ponzi scheme?

A Ponzi scheme – named after early 20th Century conman Charles Ponzi – does not generate profits from the cash it raises. Instead investors are paid a return from money coming in from other new investors.

More and more investors are needed to cover these payments. Meanwhile, the owners of the scheme move money into their own accounts.

A Ponzi scheme will collapse if it cannot find enough new investors.

What else did the leak find?

The FinCEN Files also show how multinational bank JP Morgan may have helped a man known as the Russian mafia’s boss of bosses to move more than a $1bn through the financial system.

Semion Mogilevich has been accused of crimes including gun running, drug trafficking and murder.

Image copyright FBI

He should not be allowed to use the financial system, but a SAR filed by JP Morgan in 2015 after the account was closed, reveals how the bank’s London office may have moved some of the cash.

It details how JP Morgan, provided banking services to a secretive offshore company called ABSI Enterprises between 2002 and 2013, even though the firm’s ownership was not clear from the bank’s records.

Over one five-year period, JP Morgan sent and received wire transfers totalling $1.02bn, the bank said.

The SAR noted ABSI’s parent company “might be associated with Semion Mogilevich – an individual who was on the FBI’s top 10 most wanted list”.

In a statement, JP Morgan said: “We follow all laws and regulations in support of the government’s work to combat financial crimes. We devote thousands of people and hundreds of millions of dollars to this important work.”

The FinCen Files is a leak of secret documents which reveal how major banks have allowed criminals to move dirty money around the world. They also show how the UK is often the weak link in the financial system and how London is awash with Russian cash.

The files were obtained by BuzzFeed News which shared them with the International Consortium of Investigative Journalists (ICIJ) and 400 journalists around the world. Panorama has led research for the BBC.

FinCEN Files: full coverage; follow reaction on Twitter using #FinCENFiles; in the BBC News app, follow the tag “FinCEN Files; Watch Panorama on the BBC iPlayer (UK viewers only).

The article was originally published here! FinCEN Files: HSBC moved Ponzi scheme millions despite warning