HSBC & StanChart among other financial institutions transferred more than $2 trillion of illicit money

On Monday, shares of Standard Chartered’s and HSBC in Hong Kong fell vertically following media reports that the two banks along with other banks transferred large sums of allegedly illicit funds for nearly two decades despite the transfers being red flagged due to the uncertainty of their source.

Media reports were based on leaked suspicious activity reports (SARs) filed by the financial institutions with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCen).

The uncovering underscore challenges faced by regulators and financial institutions in their effort to try and stop the flow of dirty money despite the imposition of hefty penalties, in billions of dollars, imposed on banks in the past.

On Monday, shares of HSBC in Hong Kong fell by 4.4% to HK$29.60 – its lowest since May 1995; the shares of StanChart also dropped by 3.8% to HK$35.80 – its lowest since May 25, 2020. This is against Hong Kong’s Hang Seng Index being down by 0.4%.

In recent years, both banks, HSBC and Standard Chartered, were among other global banks, which have paid billions of dollars in fines for violating anti-money laundering rules, as well as violating U.S. sanctions on Iran.

According to the 2,100 SARs, which incidentally by themselves are not necessarily proof of wrongdoing, obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) as well as other media organizations, between 1999 to 2017, more than $2 trillion worth of transactions, which were flagged by internal compliance departments of financial institutions as suspicious, were transferred.

Both banks are among five banks that figured more prominent, since their appeared more often, in the documents.

According to media reports, the SARs showed that banks moved funds for companies that were registered in offshore havens, including the British Virgin Islands; the banks did not know the ultimate owner of the account.

In a statement HSBC said, “all of the information provided by the ICIJ is historical.” As of 2012, “HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions.”

In a statement StanChart said, “We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes.”

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