Banks have a constant desire to stay within the rules. Unfortunately this goal is too often executed through a focus on the form of the rules rather than the function the rules are intended to deliver. This week The International Consortium of Investigative Journalists released a detailed study regarding money laundering. Working with information provided them by BuzzFeed News, the consortium did a detailed analysis of the flow of funds in those reports. It should be noted that the reports are confidential and it is not clear how BuzzFeed obtained the files but there has not been evidence that the files are not real.
What is clear from the analysis is that many very large banks continue to process very large transactions that have dubious backgrounds. Whilst banks should not be responsible for law enforcement, they do have a responsibility to conduct transactions with integrity. Large transfers of funds intended to whitewash money and defraud governments should not be part of a bank’s activities. Given that the amounts tend to be very large, it is difficult to believe that the bank’s can not take actions to prevent this type of whitewashing.
Of course the banks respond by noting they are not able to comment on client specifics. But that does not lessen their responsibility for knowing their clients and enforcing standards of integrity. And the transactions analysed are just a small portion of the total reports filed (0.02%), what has been reported is surely only the tip of the iceberg.
