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  • Gary Mauney

The U.S. Government and the American Banking System Need to Do More to Prevent Investment Fraud

FinCEN Documents leaked to BuzzFeed News show that some of the world’s biggest banks helped criminals move $2tn of dirty money around the world.

Charlotte financial fraud and abusive tax shelter attorney Gary Mauney reports on an important development in the role of American and international banks in criminal Ponzi Schemes and Money Laundering enterprises. American news outlet Buzzfeed and the International Consortium of Investigative Journalists ("ICIJ") are the recipients of one of the largest leaks of government financial documents in history - and the leaked documents reveal an expansive role played by U.S. and international banks in industrial-scale money laundering. These documents, and the ICIJ analysis of them, reveal a globally inadequate regulatory framework to protect investors.

Leaked documents, HSBC, and the Ponzi scheme Fraud

The leaked FinCEN files show, for instance, that Britain’s largest bank, HSBC, allowed Ponzi Scheme fraudsters to transfer millions of dollars around the world even after the bank learned of their scam, the leaked secret files show. The FinCEN documents show that HSBC moved Ponzi Scheme-related money through its United States business to HSBC accounts in Hong Kong in 2013 and 2014.

HSBC’s role in the $80m Ponzi scheme fraud is detailed in a leak of documents – most notably the bank’s "suspicious activity reports" or "SARs" - that have been called the FinCEN Files. HSBC says it always met its legal duties on reporting such activity. But the FinCEN files show, for instance, that the Ponzi Scheme investment scam started soon after the bank was fined $1.9bn in the US over money laundering. After the conduct that led to the fine, HSBC promised to clamp down on these sorts of practices.

The scam that the HSBC documents show was a Ponzi scheme - a notorious type of investment racket that typically pays existing stakeholders with money collected from new members. Lawyers for duped investors say the bank should have acted sooner to close the fraudsters' accounts.

The FinCEN document leak includes a series of other revelations - such as the suggestion one of the biggest banks in the United States may have helped a notorious mobster move more than $1bn. The documents also show how Russian oligarchs have used banks to avoid sanctions that were supposed to stop them from getting their money into the West. It's the latest in a string of leaks to ICIJ over the past five years that have exposed secret deals, money laundering and financial crime.

What are the FinCEN files?

FinCEN is the US Financial Crimes Enforcement Network. These are the people at the United States Treasury who combat financial crime. Concerns about transactions made in U.S. dollars are supposed to be sent to FinCEN, even if they took place outside the United States. Suspicious activity reports, or SARs, are an example of how those concerns are recorded. 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, and the authorities are supposed to follow up by investigating and prosecuting where it is warranted.

The FinCEN Files are a leak of 2,657 documents, the heart of which are 2,100 suspicious SARs. SARs are not themselves evidence of wrongdoing - banks send them to the authorities if they suspect customers could be up to no good. But the SARs raise concerns about what the banks' clients might be doing. These documents are some of the international banking system's most closely guarded secrets. They SARs were leaked to Buzzfeed, and ever since, hundreds of journalists have been sifting through the dense, technical documentation, uncovering some of the activities that banks would prefer the public not know about.

Why Do the Leaked FinCEN Documents Matter?

If you are planning to profit from a criminal enterprise, one of the most important things to have in place is a way of laundering the money. Laundering money is the process of taking dirty money - the proceeds of crimes such as drug dealing or corruption - and getting it into an account at a respected bank where it will not be linked with the crime. Banks are supposed to make sure they don't help clients to launder money or move it around in ways that break the rules. And the U.S. government is supposed to patrol the banks to make sure they follow the rules.

By law, banks have to know who their clients are - it's not enough to file SARs and keep taking dirty money from clients while expecting the authorities will deal with the problem. If banks have evidence of criminal activity they should stop moving the cash. If you are a United States investor, the SARs that United States banks are supposed to file become an important component in the detection and prevention of financial fraud against you. What the FinCEN leaks show is that the SARs system is broken or has broken down, due to lax enforcement, banks potentially profiting from the illicit money flow, and the U.S. government’s unwillingness to devote adequate judicial and prosecutorial enthusiasm and resources to protecting investors and U.S. taxpayers.

Mauney PLLC Protects Investors from Financial Fraud

Attorney Gary Mauney at Mauney PLLC has spent a career protecting investors from fraud, including hedge fund investors, public and private security shareholders, and investors in what turn out to be abusive tax shelters. In many of these cases, the fraud at issue would have been prevented if suspicious activities had been reported early on by the banks involved in the investment transactions. The FinCEN documents underscore the important role that SARs play in the avoidance and prevention of fraud.

Have you been the Victim of Financial Fraud?

If so, contact attorney Gary Mauney at Mauney PLLC for a confidential and privileged evaluation of your circumstances. If you think you have been defrauded, it is important that you act promptly to protect yourself and to preserve evidence you might need to prove your case. Email us:; or Telephone: 704/945-7185.


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