The Panama Papers, and other projects over recent times in which The Irish Times has been involved in conjunction with the International Consortium of Investigative Journalists, have focused attention on the heavy price the world pays for offshore companies and other types of legal entities that facilitate secrecy. This week the FinCEN Files drew attention to a second, perhaps equally important, part of a global architecture that does so much damage to people's lives.
The leaked files from the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury, give a glimpse into an international banking system that is failing us all. Trillions of euro of suspect money, including some that has been stolen from the world’s poorest by the world’s most rapacious, flow through the system, usually by way of corporate entities whose ownership is unclear.
It is easy to form the opinion, from what is contained in the FinCEN files, that the obligatory reports of suspicious activity that are made by the banks to the US bureau, are in the nature of legal-regulatory shoulder-shrugging.All too often, nothing happens. The corrupt money then becomes a corrosive presence in the jurisdictions where it comes to settle.
Oversized residential dwellings that are rarely used; offshore-owned commercial property that bleeds its tenants’ businesses; elephantine yachts that sit idle in harbours. Such are the fruits of the corruption and kleptocracy from which so much of the suspect money flow springs.
Russian money
Because of the circumstances behind the leaking of FinCEN Files – they predominately arise from inquiries into foreign interference in the 2016 US presidential election – Russian money features heavily in the suspect transaction reports. There is no reason to doubt that a better representative sample of reports would produce a more comprehensive picture of the global distribution of suspect money flows.
Like climate change, inequality, and the Covid-19 pandemic, the enabling dysfunction of the global financial system is not a problem that resides “over there”. Dublin has a massive banking and investment funds industry, through which trillions of euro flow. It is reasonable to assume it suffers from the same systemic failings that have been shown by the FinCEN Files project.
Banks have to up their game. The same is true of regulators. And governments need to provide them with adequate resourcing, while insisting on better results. More international co-operation is also essential, difficult though that may be to envisage given some of the political leaders currently occupying the world stage. It may seem like an impossible ask. But like so many of the challenges facing the contemporary world, it is not as if there is any real choice.