The FinCEN Files

Project
Published: September 20, 2020

Banner: ICIJ/BuzzFeed News

Money makes the world go round.

Banks make money go around the world.

From small cross-border payments for everyday goods and services to massive fortunes sent zipping across continents in a single wire transfer, the international banking system makes all manner of commerce and trade possible.

Unfortunately, that system, dominated by huge global correspondent banks with access to the United States Federal Reserve’s dollar-based financial clearinghouse, also helps fraudsters, organized crime figures, oligarchs, terrorists, and government kleptocrats move, launder, and hide dirty money.

Banks often move cash through their accounts for people they can’t identify; fail to report transactions with all the hallmarks of money laundering until years after the fact; and continue to do business with clients enmeshed in financial frauds and public corruption scandals.

In a series of articles presented this week, the FinCEN Files crack open the usually secretive world of international bank regulation to show how the system works, and how it fails.

The 16-month investigation was led by the International Consortium of Investigative Journalists and BuzzFeed News, and involved more than 400 journalists in 88 countries, including many from OCCRP and its network of member centers.

At the heart of the FinCen Files are more than 2,100 Suspicious Activity Reports (SARs) written by banks and other financial players and submitted to the U.S. Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN. But the SARs were just the beginning.

Reporters collected thousands of other documents, conducted interviews with key players, and crafted dozens of stories – all showing that the world’s main weapon in the fight against money laundering and international crime often fails in ways that harm everyone.FinCen Files Logo

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Stories

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Meet a World-Class Money Launderer

Reza Zarrab’s extravagant lifestyle made him famous in Istanbul as “The Turkish Gatsby.” His 2016 arrest in Miami made him globally infamous.

For years, Zarrab used a shadowy network of shell companies and couriers to move billions of dollars in cash and gold, allowing the Islamic Republic of Iran to evade U.S. economic sanctions.

Zarrab is just one in an army of fraudsters, organized crime figures, oligarchs, terrorists, and government kleptocrats who have bent the world’s financial system to move, launder, and hide dirty money.

For more than a year, OCCRP, the Courthouse News Service, Sweden’s SVT, and other partners analyzed nearly 750,000 documents and transaction records used in Zarrab’s U.S. prosecution, as well as FinCEN Files SARS.

Here are some of our major findings:

  • A close associate says Zarrab met privately with Iranian President Mahmoud Ahmadinejad in 2011, allegedly to deliver a bribe.

  • U.S. prosecutors focused on prosecuting Zarrab and Turkish bankers while ignoring a related network that moved money from Chinese petroleum companies to Iran.

  • Zarrab’s work for Iran started two years earlier than previously thought, and was a massive expansion of an operation run by his father, a member of Iran’s business and political elite.

  • Zarrab secretly handled $1.25 billion in suspicious wire transactions involving Russian and offshore entities, including several tied to a massive tax fraud exposed by the late whistleblower Sergei Magnitsky.

  • Weak and fragmented international banking systems are easily exploited, even after regulators flag transactions as suspicious or obviously criminal.

  • Far from ruined, Zarrab spent little time in custody and is thought to be living in the U.S. Some of his companies remain in business, operated by his family.

    • Read on for more.

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    What are SARS and How Do They Work?

    FAQ

    The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) received more than 12 million Suspicious Activity Reports (SARs) between 2011 and 2017. Around 2,100 of these reports — 0.02 percent — from that period were leaked to reporters and used in the FinCEN Files investigation.

    What is a SAR?

    The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) received more than 12 million Suspicious Activity Reports (SARs) between 2011 and 2017. Around 2,100 of these reports — 0.02 percent — from that period were leaked to reporters and used in the FinCEN Files investigation.A Suspicious Activity Report (SAR) is a document used by financial institutions to report suspicious activity to FinCEN. The agency received more than two million SARs in 2019 alone. The reports are so secret that banks aren’t allowed to publicly confirm their existence.

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.

    Who files SARs?

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.

    What might spark a SAR?

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.

  • Insider trading.

  • Transactions linked to money laundering, terrorism financing, or other crimes.

  • Payments for items not usually associated with a customer.

  • Transactions by individuals suspected of links to criminal or terrorist organizations.

  • Law enforcement surveillance requests.

    • They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.

    What is the most common reason for a SAR to be filed?

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.In the documents analyzed for the FinCEN Files, the main trigger was suspicion of money laundering.

    How long do banks have to file a SAR?

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.In the documents analyzed for the FinCEN Files, the main trigger was suspicion of money laundering.A SAR must be filed within 30 days of potential criminal activity being detected, or 60 days if more time is needed to identify a subject. But a SAR can also be filed years later if new information casts doubt about a customer or specific transactions.

    What happens after a bank files a SAR?

    They must be filed when a bank observes a transaction that seems suspicious — for example, if it appears to involve money laundering or corruption. A SAR is not an accusation. Rather, it’s a way for financial institutions to alert government regulators and law enforcement to irregular activity and possible crimes.Banks, money exchanges, securities brokers, casinos, and other financial institutions are required to file reports to FinCEN. Failure to do so can lead to civil penalties such as fines.In the documents analyzed for the FinCEN Files, the main trigger was suspicion of money laundering.A SAR must be filed within 30 days of potential criminal activity being detected, or 60 days if more time is needed to identify a subject. But a SAR can also be filed years later if new information casts doubt about a customer or specific transactions.FinCEN shares SARs with law enforcement authorities. They may be used to investigate crimes, but cannot be used as direct probative evidence in legal cases.