Bank stocks tumble after report alleges firms moved $2 trillion in suspicious funds

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  • Bank stocks slid on Monday after a report by the International Consortium of Investigative Journalists detailed more than $2 trillion in flows marked as possible money laundering or criminal transactions.
  • Firms identified in the report dragged on major indexes. JPMorgan sank as much as 3.9%. Deutsche Bank and HSBC fell 8.5% and 5.9%, respectively.
  • Government authorities have ordered banks to better combat suspicious flows, but various fines and threats of criminal charges haven’t worked, ICIJ said.
  • Documents obtained by ICIJ cover less than 0.02% of the more than 12 million suspicious activity reports filed with the Treasury Department from 2011 to 2017, according to the report.
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Shares of major banks sank on Monday after a report found more than $2 trillion in flows marked as possible money laundering or criminal transactions.

A new investigation by the International Consortium of Investigative Journalists and Buzzfeed published Sunday alleged firms including JPMorgan, Deutsche Bank, and HSBC “kept profiting from powerful and dangerous players” after US authorities fined the banks for failing to combat dirty transactions. More than 2,100 suspicious activity reports obtained by Buzzfeed detail the transactions, including $514 billion flowing through JPMorgan and $1.3 trillion through Deutsche Bank.

JPMorgan fell as much as 3.9% on the news and contributed to major indexes’ Monday losses. Deutsche Bank and HSBC tumbled 8.5% and 5.9%, respectively.

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Government authorities have ordered major banks to improve their processes to catch such flows, but various fines and threats of criminal charges haven’t worked, ICIJ said. Transactions revealed in the firms’ documents show banks moving cash through accounts for people they can’t identify and failing to report possible money-laundering transactions “until years after the fact,” according to the report.

The obtained documents – which cover flows from 1999 to 2017 – only scratch the surface of what could be a much larger pattern of wrongdoing. The files cover less than 0.02% of the more than 12 million suspicious activity reports filed with the Treasury Department’s Financial Crimes Enforcement Network from 2011 to 2017, ICIJ said.

Banks named in the report highlighted their work to clamp down on such activity. HSBC told ICIJ in a statement that it “embarked on a multi-year journey” to update projections against financial crime after admitting to laundering at least $881 million in 2012.

JPMorgan told the reporters it has taken a “leadership role” in investigating criminal activity and developing “innovative techniques to help combat financial crime.”

In an online statement responding to ICIJ’s report, Deutsche Bank said it has “devoted significant resources to strengthening our controls” and meeting obligations. The “historic issues” raised in the report “have already been investigated and led to regulatory resolutions in which the bank’s cooperation and remediation was publicly recognized,” the bank added.

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