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Explained: FinCEN Files

This month, International Consortium of Investigative Journalists (ICIJ) revealed it received more than 2,100 documents of suspicious activity reports (SARs) from Buzzfeed News containing information regarding potentially illicit transactions of more than $2 trillion made between 1999-2017 that were flagged by the banks.

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ICIJ and Buzzfeed News along with 108 media houses of about 88 countries came together to investigate these documents and discovered the role banks played in hiding the money looted from government treasuries, propagated through drug sales and through other illegal activities.

JPMorgan Chase, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon are a few banks that facilitated illicit cash to move with a record of fine from US authorities for similar activities. This industrial-scale money laundering was for assisted for drug dealers, fraudsters and corrupt officials.

What are SARs?

Suspicious Activity Reports of SAR is filed by banks or financial institutions against a suspicious activity in a transaction or account. These reports are filed to the Financial Crimes Enforcement Network (or FinCEN) is a division of US Treasury which investigates and combats money laundering and financial crime issues. Failing to report potential suspicious activities results in fine against the financial institutions. The information is shared with other intelligence agencies such as FBI, U.S. Secret Service and Customs Service among others. While in India, Financial Intelligence Unit (FIU-IND) receives information from various financial institutions – Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs).

FinCEN and India

406 of such transactions are of Indian banks where they received $482,181,226 and $406,278,962 was sent out of the country. Indusind Bank, Bank of India and Canara Bank have the maximum number of these transactions among the 44 banks that were included in the FinCEN flies. HDFC Bank Limited had the highest amount sent $327,999,890 and Indian Overseas Bank received the highest amount $162,394,185. All of these transactions were processed through three US-based banks namely, Bank of New York Mellon Corp, Standard Chartered Plc and Deutsche Bank AG – SARs regarding the transactions were also made to FinCEN.

According to Indian Express, these SARs have transaction details between a Seychelles-based investment company named Thionville Financier Ltd. And Adani Global PTE. BNYM filed these SARs owing to the “high round-dollar amounts” transactions from Thionville to the Adani conglomerate and the suspicion of the former being a shell company. These transfers amount to $14.46 million. While the Adani Group spokesperson said, “Our commercial transactions with Thionville Financier Limited is completely legitimate and the same have been fully disclosed to the authorities in the respective jurisdiction.”

Another report by Indian Express states three red-flagged transactions involving Jindal Steel and Power Ltd (JSPL) with an amount of $1.323 million that JSPL received from the Dubai-based Power Plant EPC Ltd. JSPL sent $1.799 million and $1.3 million sent to Mauritius-based Trans Global Minerals and Metals Corporation (TGMM) and Germany-based Oceanwide Services GmbH. These SARs were filed by Deutsche Bank Trust Company Americas (DBTCA). It was claimed during the investigation by JSPL that these transactions were payments made for “Handling charges, Commission, and Payment towards (cargo ship) Vessel MV EIPIS,” while TGMM was said to “investment holding, international consulting & international Trading,” as its main business activity. Both the claims fail to align. The current owner of the company is an Indian, Amit Gupta. However, he confirmed he was not the owner of TGMM during 2014-2016 – the period in which these transactions took place.

Other SARs includes details about the $3 million fraud case regarding the sponsorship fee of the IPL team, Kings XI Punjab and money laundering by Altaf Khanani who has been a financier for terrorist Dawood Ibrahim.


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