Tuesday, 23 July, 2024

Dirty Money Flow And Fragile Democracy

Namrata Sharma


According to BBC report of 21st September 2020, HSBC's share price fell to its lowest level since 1995 amid allegations of money laundering. On Monday in Hong Kong, the shares fell by more than 4 per cent and in London at midday they were down 6 per cent. Shares in rival banks such as Standard Chartered and Barclays were down by 5 per cent and 6 per cent, respectively, while that of Germany's Deutsche Bank went down 8 per cent.

Unhealthy economy
The lack of a healthy financial system anywhere leads to an unhealthy democracy. It will not be an exaggeration to say that these banks and similar financial institutions operating worldwide are helping in creating an unhealthy global economy by taking dirty money which could be the proceeds of crimes like drug dealing or corruption and getting it into an account of a “respected bank” where it will not be linked with crime. Banks need to make sure they don’t help their clients to launder money.
On 20th September at 11pm Nepal standard time and corresponding time all around the world, the International Consortium of Investigative Journalists (ICIJ) revealed the FinCEN Files. Financial Crimes Enforcement Network (FinCEN) is a government body that monitors financial transactions system in the US.
FinCEN Files reveal financial transactions from 1999 to 2017. The files include 2,100 extremely secret documents known as the Suspicious Activity Reports (SARs) that were obtained by BuzzFeed News and shared with ICIJ. It was then collaborated with journalists in ICIJ’s network around the world. Their partner in Nepal is the Centre for Investigative Journalist (CIJ) Nepal.
Amy Wilson-Chapman, ICIJ Community Engagement Editor, mentioned in their release, that they will be continuously releasing a series of “shocking worldwide tour of corruption and inequality”. Although the idea of money laundering and the despots, terrorists and drug lords who benefit from it may not register as an immediate threat- especially in a year punctuated by a global health crisis, the coronavirus pandemic may actually show how important every dollar is to our revenue-starved governments.
These documents gave the ICIJ team insights into the secret world of international banking. From these files more than 400 reporters in 88 countries have taken “threads of information” including names of companies and people and researched further on them, interviewed and further sourced about 17,000 additional documents to tell stories of notorious figures who have benefitted from a system that has been unable to protect the general people.
The FinCEN Files name big global banks, including JP Morgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon. This report shows how very simple citizens like a man in California were killed because he was part of a Ponzi scheme. Another example is the Russian parents who wanted a used car to take their sick child to hospital but instead ended up losing US$ 15000; cases of Olympic athletes being cheated of victories by crooked officials and drug dealers who lure innocent people into overdose for which the funds travel across the global financial systems which many of us never realise.
Banks like JP Morgan may have helped a man known as the Russian mafia to move more than a $1billion through the financial system. The husband of a woman who has donated £1.7m to the UK's governing Conservative Party was secretly funded by a Russian oligarch with close ties to President Vladimir Putin. The UK is compared to Cyprus by the intelligence division of FinCEN. The number of UK registered companies that appear in the SARs are over 3,000. The Standard Chartered Bank moved cash for Arab Bank for more than a decade after clients' accounts at the Jordanian Bank had been used in funding terrorism.
FinCEN files exposure could portray Nepal as a country with a weak legal system and lack of trustworthy economy, says Shiva Gaunle, Editor CIJ, Nepal. As partner of ICIJ in Nepal, CIJ explored the FinCEN files and has exposed that between December 2006 and March 2017, nine banks, 10 companies and various individuals in Nepal were found to have transacted suspicious funds in the name of cross-border trade. These Nepali business entities are linked to the international smuggling of gold, antiquities, bitumen, and telecommunication equipment. Standard Chartered Bank, Prime Commercial Bank, Bank of Kathmandu, Nepal Investment Bank, Everest Bank, Mega Bank, Himalayan Bank, Apex Development Bank of Kaski, and Nepal Bangladesh Bank are on the list of banks involved in transferring suspicious money. The FinCEN files show the involvement of 10 Nepali companies in directly sending or receiving the suspicious funds.

Suspicious transfer
An amount of US$ 292.7 million has been transacted through these banks and companies during the period of 11 years. The total sum of incoming and outgoing amounts turns out to be $177.6 million. Out of this amount, $103 million has made a clear exit from Nepal. Likewise, $74.6 million has arrived in Nepal. As per the FinCEN files, Standard Chartered Bank of Nepal has brought and sent the largest sum of money in regard to suspicious transactions and transfers.
Investigative reports like these have revealed the corruption and dirty money flow several times creating a sensation. It indicates that there lacks proper will and system globally to check the rich and powerful from using the very system to guard the money. This probably leads to fragile democracy and human rights surfacing globally.

(Namrata Sharma is a senior journalist and women rights and can be reached at namrata1964@yahoo.com Twitter handle: NamrataSharmaP)