Fascinating New Reporting

I didn’t think I’d be posting again so quickly after Friday’s devastating news. But today, Buzzfeed News launched their major investigative reporting series, the “FinCEN Files.” It’s sure to continue generating headlines and will be a major focus at anti-money laundering conferences for the foreseeable future.

The series is some of the best investigative journalism I’ve seen in this field. The reporting speaks for itself, but the core centers on several thousand Suspicious Activity Reports leaked to Buzzfeed over a year ago. The Bank Secrecy Act requires financial institutions to file those reports, called SARs, to report suspicious transactions and other conduct that may suggest illegality like money laundering or terrorist financing. The reports are compiled by a Treasury agency, FinCEN—the Financial Crimes Enforcement Network—which often shares them with U.S. law enforcement and with law-enforcement and intelligence agencies around the world.

I’m not aware of any prior leak of so many SARs, which are confidential and sensitive. Buzzfeed worked with hundreds of journalists around the world through the International Consortium of Investigative Journalists. These investigators analyzed not only the SARs themselves, but also thousands of government documents, bolstered by interviews.

The thrust of the stories is that many global banks may have continued transacting business with suspicious actors, despite good reason not to do so. And the government has rarely acted on these SARs or against the banks themselves for lax anti-money laundering controls. The series includes a fascinating interactive map allowing readers to trace suspicious transactions around the world. It also coincides with the launch of a podcast on the investigation—I’ll be adding that to the blogroll here. And Buzzfeed‘s partner organizations have started running their own stories from the documents, like this NBC piece on North Korea.

Some Cautionary Notes

The stories are fascinating and represent a monumental journalistic achievement. Yet that doesn’t mean I’ll agree with all their analysis.

First, many of the big-picture items have been public knowledge for awhile. HSBC’s settlement with DOJ related to laundering cartel money, for instance, has been the subject of extensive criticism.  It’s even been at the center of a Netflix documentary. So too with longtime scrutiny of Deutsche Bank’s involvement with sanctioned Russian figures. What really sets the “FinCEN Files” series apart is access to the underlying SARs and other more granular details.

Second, the reporting so far seems to take a familiar editorial stance: big banks are recklessly laundering billions for crooks, terrorists, and drug cartels while the government turns a blind eye. This apparent lack of major criminal consequences for the individuals at the head of these banks has been the focus of work we’ve talked about. And work we’ll talk about in the future. Maybe it’s just my role as a defense attorney, but I don’t know that rich crooks and lazy prosecutors are the full story here. The legal framework governing money laundering controls is complex. What’s more, there may be valid reasons weighing against aggressively going after heads of financial institutions for the suspected actions of their customers.

Third, that brings me to another concern that—to the lead story‘s credit—Buzzfeed highlights. SARs, without more, don’t mean much. Bank compliance officers prepare them based on suspicious circumstances that could well have innocent explanations. Large banks routinely submit thousands or tens of thousands each year. While law enforcement sometimes find value in prosecuting money launderers, there are sometimes sound reasons—intelligence collection for one—to use other tools to monitor those transactions without disrupting them.

Fourth, I’ve got to push back on one minor point. The lead article suggests that the Trump Administration made it harder to go after individuals with recent guidance discouraging piling on with criminal enforcement. I wrote about this policy before. There’s nothing wrong with requiring DOJ components to coordinate with one another and with other agencies to prevent disproportionate penalties. I call that justice.

Government Response

Last Thursday, after news of this story began circulating, FinCEN announced a new proposed rule. It would require covered financial institutions to beef up their anti-money laundering programs. We’ll see what changes, if any, are made after the public comment period.

In any event, in a dark time—with both local and national outlets facing sometimes existential crises—this series is an incredible accomplishment. Everyone at Buzzfeed and their dozens of partner organizations around the world who worked on this should be congratulated. I told you that Buzzfeed‘s investigative work was indispensable. Glad to see that I was right.