FinCEN leaks have jolted the whole world. The most reputed banks of the world were being used to launder money by organized crime groups, drug dealers and fraudulent companies.JP Morgan, HSBC, Standard Charted Bank, Deutsche Bank, UAE Central Bank and Barclays Bank are few examples. It has been reported that banks were involved in laundering of about US$ 2 trillion. It all happened during 2002-2017, the time when USA was leading war on terror in alliance with Western countries. The revealed documents are only 0.02 percent of total SARs, which means the real problem would be bigger than imagination. Besides, according to FinCEN leak London is hub of major money laundering activities and it showed that about 3000 companies has links in London.It has already been flagged by Transparency International, UK, in its report that 86 UK banks and financial institutions assisted to dirty money holders to buy assets.
It is not first financial leaks. There is history of leaks. Although in Pakistan the most famous leak is Panama but there are many others, which have bigger scandals in themselves. For example, paradise leak of 2017 involved very big names and companies. We can find name of Queen of UK, Prince Charles, Apple and many more. It involved Western financial institutions and companies. The offshore companies helped these individuals and companies to cheat, avoid taxes and in some cases use for other means. Deutsche Bank scandal is another example, where bank fail to stop dirty money. It led to movement of US$ 10 billion. Bank only paid some plenty and scarified few mid-career employs in Russia and now it is back on normal business. FinCEN leaks also highlighted that US$ 1.2 trillion from US$ 2trillion was moved through the Deutsche Bank. It put the bank at top and make it real matter of concern for bank and host country.
Western countries, FATF and anti-money institutions need to understand that the double standards will not work anymore. We are not living in Cold War era
Panama leak is another scandal, which has special relevance for Pakistan. The leaked documents showed that how tax heavens and offshore destinations helped to launder money from poor countries. The Western system failed to disclose all this until the scandal was brooked. It created huge hue and cry in Pakistan, as well as political leadership of Pakistan was also involved in this scandal.
However, the FinCEN leak has put many questions, directly on international banking system and operation of leading banks. It is also being said that it just tip of the iceberg, the real scam would be of much bigger value and scale. It is expected that further investigation will reveal the real extent of the problem, if it happens. The Guardian reported that official at FinCEN declared it as a crime and asked the journalist to abide by the law. The statement quoted is as “the unauthorised disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports”. The statement is very strong and FinCEN has attached it with national security and warned about the security of individuals and companies. It will hinder the work of journalists with freedom, which is very close to heart of USA and liberal values of the country, in written books.
These all leaks qualify for the full fledge inquiry by anti-money laundering agencies, especially by FATF. FATF, should be asking all these banks how and why it happened? If the transactions were suspicious, why banks let it happen again and again? Was it not responsibility of banks to take actions or they were only satisfied by reporting it? FATF should also questions all host countries of these banks, why they were failed to stop it? Why the rules and laws of the respective countries did not take immediate steps to stop it? FATF should also probe and look at the probability of involvement of policy makers and implementors in these countries? The case of UK must be investigated, as it has also been report by Transparency Internatnal. Unfortunately, presently there is no movement by FATF to ask such questions to host countries, especially to UK.
On contrary, FATF is pushing Pakistan to erect all types of instruments and laws. It is also asking Pakistan to do more with every episode of meeting. Pakistan is also being maligned by international players and policy makers from the Western countries and pose serious question on the laws of Pakistan. These are the same Western, where these banks are being registered and operated. Rather than asking question to these countries, some experts started to highlight other countries, why people laundered money for those countries. It is deliberate effort to divert attention.
The situation poses serious question on FATF, anti-money institutions and Western countries. It seems that FATF and anti-money instruments are only used to secure political and economic interests of few powerful Western countries and allies. Besides, these instruments are also used against countries which do not obey the instructions of Western countries to secure the business interest of their countries and companies. In Pakistan the debate has already started that Pakistan is being punished to be ally of China. It has also been argued that the real target of FATF is to stop the CPEC and CPEC investment in country. The other element of debate is that the Western countries, especially USA wants that Pakistan should help them to leave Afghanistan with honour. So, the FATF is being used to secure the political and economic interests of these countries.
The argument is further strengthened by obvious pressure by USA, Western countries and their allies to leave the CPEC. They are engaged in running smear campaigns against CPEC at one name or other. Sometime the argument of debt trap is being used and other time the issue of employment is being discussed. Even they are trying to equate CPEC with East India Company. Although, CPEC is an investment initiative and creating good opportunities for Pakistan but campaign is still going on. Same is true in the case of China-Pakistan friendship. When Pakistan refused to abandon China or to be part of campaign against China, then the instrument of FATF is being used. Pakistan is in grey list and trying hard to come out of it. Owing to FATF investment in Pakistan has been greatly impacted. It has also impacted international business linkages and business.
Regretfully, in the case of Western countries, these all institutes remain silent on such blatant violations and facilitations. Western countries, FATF and anti-money institutions need to understand that the double standards will not work anymore. We are not living in Cold War era. We are living in the age of information revolution and knocking at the door of fourth industrial revolution. The unjust or biased practices will not hold ground anymore. The information cannot be hold and it is evident from WikiLeaks to FinCEN leaks. Hence, they need to change their practices and look for rule based international order. The order which protect the legal and legitimate interest of everyone. The order should not be instrument of influence or tool to secure interests of few powerful. If the institutions refused to learn, the ultimate impact would be on the legitimacy of these institutes.