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JPMorgan, HSBC named in money laundering report: RPT

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Major banks like HSBC and JPMorgan Chase reportedly moved trillions of dollars, identified as being potentially tied to money laundering. Yahoo Finance’s On The Move panel shares the details.

Video Transcript

ADAM SHAPIRO: Part of what we're watching is this blockbuster report about suspected transactions and money laundering that the world's largest banks notified regulators about dating from 1999 through 2017, $2 trillion in all. Tom Belger covers some of this for us from Yahoo Finance. He's in London. And this is a report from the International Consortium of-- of Investigative Journalists. What more can you tell us?

TOM BELGER: Yeah, as you say, for those not following it, this is a [INAUDIBLE] of leaked documents reportedly showing global banks knowingly move vast sums of illicit cash. And on top of rising COVID cases, that's really hammering bank stocks today. So these are the so-called FinCEN files. That's named after a-- a department within the US Treasury Department.

It's a series of reports on-- more than 2,000 reports written by banks themselves about suspicious activity that they then filed with the US Treasury Department. And as you say, some $2 trillion over the past couple of decades that they think this is just a fraction of all of the actual reports. But what BuzzFeed and other outlets, investigative journalists around the world are claiming is that big banks have been moving money for drug barons, for terrorists, for corrupt officials. There's too many to mention here.

And HSBC, for instance, one of the banks named, one of the five banks even whose names comes up most apparently in these files, they're accused in one case of letting fraudsters transfer millions around the world, not just after they've been fined in the US over money laundering and promised change, but also apparently after they knew about this alleged Ponzi scheme.

While HSBC and other banks claim as though that these are historical allegations-- as you say, they went up to 2017-- HSBC say they've radically overhauled their anti-economic crime measures since 2012, but clearly investors far from reassured. You've seen on HSBC alone billions wiped off its share price today and taken its shares, as well as standard chartered shares, down to their lowest since the mid-1990s.

European banking shares across the board well down today, and European shares as a whole overall is set for their worst day in three months on COVID concerns as well. And in the UK, on fears that tomorrow we might get stricter lockdown measures. It's also worth just saying on these-- these reports they don't actually prove wrongdoing.

But it's raising huge questions clearly about the scale of illicit money flows, about the extent of bank's knowledge about these flows of money and how some of them, it appears, continue to profit even after they knew what was going on, and also finally questions about the robustness of the government and-- and of banks' clamp-downs, or alleged clamp-downs, on some of this behavior.

One thing finally, banks' responses themselves, they're saying they fully comply with the law. They're saying tackling economic crime is a priority. British government says they're taking robust action. And an interesting claim from the US Bank Policy Institute too, they say you can hardly accuse banks of hiding illegal activity when it's banks themselves who alerted law enforcement to that very activity.

And he also pointed out, the head of that bank policy institute, banks aren't legally allowed apparently to comment and share their side of the story. So it's a horrid day for banks on the stock market. And as I say, European stocks looking to set for the worst day in three months.

ADAM SHAPIRO: Tom, it might be a potential lockdown in the UK, but considering the politicalization of the climate globally and the banks, it might be "lock 'em up" that some people are screaming on this report. Thank you.