Financial Crimes Enforcement Network (FinCEN) is a part of the United States of America's Department of the Treasury. Established on April 25, 1990, FinCEN collects information about financial transactions and analyses it to prevent domestic and international money laundering, terrorist financing, and other financial crimes.
Panama Papers, Paradise Papers and now, FinCEN Files. The case sheds light into the dubious transactions involving potential money laundering, terrorism, drug dealing or financial fraud around the world. In 2020, media houses, who are part of the International Consortium of Investigative Journalists (ICIJ) and 109 other news publications, uncovered stories of suspected cases of financial frauds worth $2 trillion. These transactions took place between 2000 and 2017.
What are FinCEN files?
The FinCEN files comprise 2,657 documents, including 2,121 suspicious activity reports, most of which were files that banks sent to the US authorities between 2000 and 2017. These documents, known as Suspicious Activity Reports (SARs), are some of the international banking system's most closely guarded secrets. A bank must fill in one of these reports if it is worried one of its clients might be up to no good. The report is sent to the authorities.
In effect, they are crucial red flags raised by banks that point law-enforcement agencies to further investigation. Banks use them to report suspicious behaviour, but they are not proof of wrongdoing or crime. Hence, these are not evidence of illegality.
Almost 80 per cent of these SARs involving transactions worth $2 trillion were reported by top global banks such as Deutsche Bank, Bank of New York Mellon (BMYM), Standard Chartered Bank, Citibank, and JP Morgan Chase.
How is FinCEN files leak different from other cases
LuxLeaks, 2014: Documents from PricewaterhouseCoopers were leaked showing that big companies were using tax deals in Luxembourg to reduce the amount they had to pay.
Swiss Leaks, 2015: Documents from HSBC's Swiss private bank showed how it was using the country's banking secrecy laws to help clients avoid paying tax
Panama Papers in 2016: Leaked documents from Mossack Fonseca showed how wealthy people were using offshore tax regimes to their benefit
Paradise Papers in 2017: The leaks revealed the offshore financial dealings of politicians, celebrities and business leaders
FinCEN Files, however, are not just documents from one or two companies - they come from a number of banks.
History of FinCEN
FinCEN was established in 1990. It officially became part of the US Treasury in 2002 when the USA Patriot Act of 2001 passed. This move effectively increased its authority to enforce anti-money laundering laws.
FinCEN's self-described motto is "follow the money." Since September 2012 FinCEN has been generating 4 new reports: Suspicious Activity Report (FinCEN SAR), Currency Transaction Report (FinCEN CTR), the Designation of Exempt Person and Registered Money Service Business (RMSB).
FinCEN shares information with US agencies like the Drug Enforcement Administration, the Federal Bureau of Investigation; the US Secret Service; the Internal Revenue Service, etc.
