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A roundup of FinCEN Files reporting from Europe

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Mafia groups, terror financiers, arms dealers and sanction busters all featured in stories published by the International Consortium of Investigative Journalists’ European partners as part of the FinCEN Files investigation.

The FinCEN Files is a cache of classified documents largely made up of more than 2,100 suspicious activity reports, secretly sent by banks to a unit of the U.S. Treasury Department called the Financial Crimes Enforcement Network, or FinCEN. 

Obtained by BuzzFeed News and shared with ICIJ and more than 100 other media organizations, the FinCEN Files detail suspect money flows of more than $2 trillion between 1999 and 2017. 

Notorious figures

Secret bank documents revealed how several underworld figures received some of the estimated $10 billion in illicit funds laundered out of Russia through shell companies engaged in carefully choreographed stock deals, known as “mirror trades.” 

Among the recipients, FinCEN Files showed, was Altaf Khanani, a notorious launderer who had allegedly moved money for criminal groups ranging from Mexican drug cartels to al-Qaida, reported the Danish Broadcasting Corporation, one of the ICIJ’s media partners. 

Another recipient of funds laundered through the mirror trades was a Dubai company controlled by a key lieutenant of Vladislav “Blonde” Leontyev, a Russian mafia figure and drugs trafficker, Aftenposten/Berlingske and BuzzFeed News reported.

Deutsche Bank

The majority of SARs in the cache of secret documents concerned transactions involving Deutsche Bank. Specifically, they focused on the U.S. arm of the German bank and the role it played in helping a roster of controversial small banks around the world process highly suspicious transactions in dollars. 

Deutsche Bank helped more than 500 smaller banks around the world complete transactions in U.S. dollars on behalf of their customers, according to ICIJ’s German media partners WDR and NDR, .

One of Deutsche Bank’s competitors, Bank of America, became so concerned about the suspicious U.S. dollar transactions the German bank was helping to process that it requested a meeting. What happened when officials from the two banks met is disputed, but according to Bank of America, Deutsche Bank abruptly ended the discussion at its London offices and asked visitors from the U.S. bank to leave immediately. Soon after, Bank of America took the extraordinary step of secretly warning the U.S. Treasury of its fears about Deutsche Bank, describing the meeting in detail and naming senior executives at the German bank, reported BuzzFeed News.

The Estonian and Lithuanian branches of Denmark’s biggest lender, Danske Bank, were among the small banks that relied on Deutsche Bank’s U.S. operations to help complete transactions. The FinCEN Files detailed how several customers of these Danske Bank branches played a major role in moving money in the Russian mirror trading scheme, ICIJ’s Danish partner Berlingske reported

One intelligence assessment by FinCEN described the 54 shell companies that perpetrated the mirror trading scheme, noting that many held accounts at Danske Bank. A large number had something else in common, too: they were registered in the U.K. — nine of them at the same address in Potters Bar, a quiet commuter town north of London. 

The BBC, an ICIJ partner, reported that this address was home to more than 1,000 companies but that no one had answered the door when reporters visited. The small office was among the most frequently cited in all SARs received by FinCEN, documents showed, helping place the U.K. among “higher risk jurisdictions” for money laundering, comparable to Cyprus. 

Mirror trading

ICIJ partners reported that several of the U.K. shell companies involved in the mirror trading scheme submitted false financial statements to the British corporate registry, known as Companies House. ICIJ’s Belgian partner Knack tracked down the man who signed many of these statements: a dentist living in a modest house on the outskirts of Brussels. He said he had never heard of the companies and his signature had been forged.  

Several Dutch companies also played a vital role in the mirror trading scheme, according to ICIJ media partners Investico, Trouw and Het Financieele Dagblad — and did so as clients of the Netherlands’ ING Bank.

But the FinCEN Files revealed that the most popular bank for the mirror trade launderers was the Estonian branch of Danske Bank, which had been a hotbed of dirty money until its foreign banking operations were shut down in 2015, according to an independent report published by the bank in 2018. Estonian police named several former bankers two years ago as suspects in a criminal investigation into money laundering at the bank two years ago. 

Using the FinCEN Files and a leak of police and bank files obtained by ICIJ’s Italian partner L’Espresso, reporters from Estonia’s Eesti Päevaleht and Organized Crime and Corruption Reporting Project were able to piece together the inside story of how Danske Estonia operated in close collaboration with secretive clients. The bankers even secretly ran a side business, helping bank clients set up anonymous shell companies, they reported.

Three years ago, American and British regulators fined Deutsche Bank $630 million for the role played by its Moscow and London equities trading desks in the mirror trading scandal between 2011 and 2015. But as part of its FinCEN Files reporting, ICIJ’s German media partner WDR revealed that, as recently as 2017, the German bank believed it may have unwittingly helped further laundering schemes involving mirror trading, according to suspicious activity reports. 

Other European banks

Deutsche Bank wasn’t the only European lender with operations in the United States, busily helping smaller banks complete suspicious transactions for their clients. Others included British-headquartered HSBC, Standard Chartered Bank and Barclays Bank, according to U.K. media partners the BBC and Private Eye.  

HSBC repeatedly moved money for a ponzi scheme, despite warning authorities that the funds were likely to be proceeds of a crime, the BBC reported. Meanwhile, Standard Chartered moved money which may have been linked to terrorists organizations, according to the BBC and Private Eye.

BBC News Arabic and ICIJ’s Israeli partner Haaretz used FinCEN Files documents to identify Russian oligarch Roman Abramovich — best known outside his home country as the owner of British soccer club Chelsea Football Club — as the anonymous donor who had spent $100 million on bankrolling a controversial Israeli settler organisation that operates in East Jerusalem.

ICIJ’s Latvian media partner Re:Baltica used the FinCEN Files to trace payments to and from the business empire of Abramovich’s former business partner and fellow oligarch Oleg Deripaska. Much of his money flowed through a bank in Riga, Latvia’s capital city, called Expobank. Separately, one document in the FinCEN Files showed Expobank had processed more than $29 billion in suspicious transactions for its customers, many of them shell companies.  

Arms dealing

Elsewhere in its Fincen Files reporting, Haaretz revealed that Israeli state arms manufacturer Israel Aerospace Industries had paid $155 million to two anonymous offshore companies associated with money laundering and corruption allegations involving the Azerbaijani governing regime. The payments appeared in more than a dozen SARs submitted to FinCEN by Deutsche Bank, the Isreali outlet reported.

Other arms dealers featured in FinCEN Files revelations too. In 2017, Serbian arms manufacturers and traders sent and received a total of $13.6 million, flagged as suspicious in the FinCEN Files, according to ICIJ’s Serbian media partner Krik.

According to OCCRP, the FinCEN Files showed companies linked to controversial Ukrainian arms broker Iurii Lunov that were transacting through a bank account at Danske Estonia as late as 2014. Years earlier, Lunov had featured in a United Nations investigation into a high-profile foiled effort to ship armaments to North Korea, in breach of international sanctions.

Sanctions-busting also featured in OCCRP’s reporting on the activities of Reza Zarrab, the high-living Turkish money launderer who found numerous ways to circumvent U.S. efforts to block international trade with Iran. In one FinCEN Files document, a bank secretly reported that it had heard that Zarrab charged 8% for his services, OCCRP reported.

See more FinCEN Files reporting from Europe and stories from your country here. 

The post A roundup of FinCEN Files reporting from Europe appeared first on ICIJ.

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Election Integrity

Analyzing the Case for Election Fraud

Despite the overwhelming pressure, if you can’t help but feel that tingling sense of knowing that is telling you there’s more to the story, you are not alone. In fact, according to a new Rassmussen poll, nearly 50% of voters believe the election had issues. A quick look at the data blatantly shows that indeed, shenanigans abound (how can a state have 1+ million more mail-in ballots tallied than they sent out?). But was it fraud or masterful gamesmanship?

Adryenn Ashley

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The world, or at least the global media, has spoken: Biden won the 2020 Election.

UPDATED FREQUENTLY WITH NEW INFORMATION – Last update 12/21/2020

A quick Google search reveals pages upon pages of reports of why the Trump team’s assertions of vote fraud and election fraud and vote flipping are flat out fallacies. YouTube has announced a ban on any videos questioning the election results. And now on Monday all 538 electors have voted, formalizing Biden’s 306-232 win. And while there is still Congress to get through, and the inauguration, based on social media and television news and practically every other point of information bombarding society today, Biden is now the President-elect.

But why now, after Government officials confirmed during Senate testimony that a foreign adversary, Russia, attempted to interfere in the 2016 United States Presidential Election via “a multi-faceted approach intended to undermine confidence in our democratic process.” According to U.S. intelligence official reports, Russia targeted voter registration databases in at least 21 states and sought to infiltrate the networks of voting equipment vendors, political parties, and at least one local election board. And if their purpose was not so much to “hack” the election but create chaos and sow seeds of uncertainty around our election process, I would say they have won. But what if this cycle, it was Russia who somehow manipulated extra ballots and placed the blame on the Democrats? What if…?

Russian Experience With Voter Fraud

The 2004 presidential election in Ukraine saw suspiciously high turnout rates that “even Stalinist North Korea would envy,” the State Department declared!

Back then, the U.S. government decried as corrupt an earlier election where special voting boxes were created to help citizens vote from home, election observers were expelled from vote counts, pre-election polls were wildly off, and voter turnout in certain communities exceeded 90%.

But the story of that Ukrainian election as recounted by then-Ambassador John Tefft to a Senate committee in December 2004 raises a tantalizing question for voters distrustful of the Nov. 3 elections results in our own 2020 Presidential Election: If tactics and outcomes in the Ukrainian election back then were enough to cry foul, why can’t Americans debate similar concerns here?

Tefft’s testimony raises an important question: Should America, the greatest democracy in the world, share any of the fraudulent attributes of a Ukrainian election? The answer for most Americans is hopefully resounding “No.”

And despite continued and repeated headlines that there was no fraud, according to the Harvard Kenney School report on Election Integrity this cycle, expert assessments indicate that compared with 2016, the performance of this contest displays several warning flags, namely worsening confidence in the integrity of American elections and falling public trust, challenges to legitimacy arising from threats of campaign violence,legal disputes about the process and results, and public protests about the outcome, as well as growing attempts at voter suppression. 

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Investigations

Advocates celebrate major US anti-money laundering victory

Landmark laws to thwart the use of U.S. shell companies by terrorists, human traffickers, arms dealers and kleptocrats are set to be enacted after more than a decade of lobbying and politicking with rare bipartisan support.

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Advocates celebrate major US anti-money laundering victory

The sweeping anti-money laundering reforms hitched a lift in the annual defense spending bill that passed the Senate 84-13 today, and was approved by the House 355-78 earlier this week.

The Corporate Transparency Act requires U.S. companies to report their true owners to the Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN — largely ending anonymous shell companies in the country.

The International Consortium of Investigative Journalists has repeatedly documented how the rich, the powerful and the criminal have used anonymous entities to hide their wealth, including in the 2016 Panama Papers and the 2020 FinCEN Files investigations.

Welcoming the clampdown, Transparency International’s U.S. director Gary Kalman said, “It is rare for such a simple measure to promise such an enormous impact.” Kalman added that the long sought anti-corruption reforms would “move us into a new era of enforcement.”

The new legislation will allow law enforcement agencies and financial institutions to request company ownership information from FinCEN. The data will not be publicly available.

FinCEN Files was based on a trove of suspicious activity reports filed by banks and other financial institutions to FinCEN. BuzzFeed News obtained the secret documents and shared them with ICIJ and more than 100 other media organizations.

The global investigation exposed how a broken U.S.-led enforcement system allows banks to continue to profit from moving dirty money tied to drug cartels, trafficking rings fueling the opioid crisis, fraud, organized crime, sanctions evasion, ruinous real estate schemes, and terrorism.

“Too many times, people … think money laundering is a federal, victimless crime. It is certainly not that,” Sen. Sherrod Brown of Ohio, the top Democrat on the Senate banking committee, told reporters on a call organized by the advocacy group the FACT Coalition. “Sinaloa cartel actors, fentanyl traffickers have been destroying thousands of families in my state and across the country.”

Earlier this year, Brown credited FinCEN Files for revealing the lack of forceful enforcement against banks that repeatedly violate the law. Advocates said a number of proposed bipartisan bills, including one co-sponsored by Brown, were instrumental in generating the support needed to attach the reforms to the spending bill.

“This is a really big deal to get this passed,” Brown said Thursday. “No more hiding these abuses in anonymous shell companies. It also cracks down on bank officials who look the other way or actively aid money laundering.”

A long time coming

ICIJ has shown how offshore shell companies have been used for dubious financial dealings and tax avoidance through a series of global exposés, including the Secrecy for Sale investigation, Panama Papers and Paradise Papers. U.S. lawmakers have repeatedly cited the investigations in proposing reforms over the years.

Countries like the United Kingdom, Indonesia and members of the European Union also took steps toward ending anonymous shell companies in response to ICIJ reporting.

“When the Panama Papers leaked, there was a huge flurry of interest because there’s all of a sudden this recognition that it was kleptocrats, money launderers, corrupt officials the world over, as well as criminals, were all using a very common structure to help evade law enforcement, which was setting up an anonymous company,” Lakshmi Kumar, policy director of Global Financial Integrity, said.

The phenomenon is not limited to the exotic offshore tax havens of popular imagination. U.S. jurisdictions like Delaware, Wyoming and Nevada are among the world’s top locations to set up anonymous companies. Legislation to require corporations to disclose their true owners was first proposed in the U.S. over a decade ago, co-sponsored by then-senator Barack Obama, and similar bills have been introduced over the years.

Advocates credit years of lobbying a broad coalition of stakeholders, including the U.S. Chamber of Commerce which had previously been a leading opponent, in getting the reforms across the finish line this year.

“What’s changed now is a growing understanding among various constituencies about the harms that anonymous companies pose, and the threats that they pose for our financial system, to our businesses,” Clark Gascoigne, senior policy advisor at FACT Coalition, said.

But it’s not a done deal quite yet.

Although the anti-money laundering proposals have had the support of the administration, President Donald Trump has repeatedly threatened to veto the National Defense Authorization Act over provisions unrelated to financial secrecy.

Both the House and the Senate votes surpassed the two-thirds margin that would be needed to override a veto, although some Republicans have indicated that they would not support what would be the first veto override of the Trump presidency.

But the NDAA has been reliably passed by Congress every year for six decades and advocates are confident that the time has come for the landmark financial transparency measure that’s included in the omnibus bill.

“It’s one of the few areas where the outgoing Trump administration agrees with the incoming Biden administration,” Gascoigne said. “It may be the first bill in the history of Congress that has the support of both Dow Chemical and Friends of the Earth. Heck, the state of Delaware even supports reform.”

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Investigations

Muslim Brotherhood suspect and Saudi billionaire linked to same offshore companies, Austrian report says

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One of 30 people in Austria suspected to be members of the Islamic fundamentalist group Muslim Brotherhood was the director of offshore companies linked to a Saudi billionaire, according to an investigation by Austrian media outlets profil and Ö1.

The man, described as a 37-year-old Viennese entrepreneur with Iraqi roots, is suspected of “participating in a terrorist, subversive and criminal organization” and was a target of the police investigation into the group and the Palestinian extremist organization Hamas, the report said

The inquiry, which led 930 officers to raid 60 apartments, shops and clubs in four federal states last month, had no connection to the Vienna terror attack that killed four and injured 23 on November 2, according to officials cited by Deutsche Welle.

The Austrian report ー based on police records ー does not name the suspect, nor the Saudi businessman, for fear of hampering the ongoing probe into possible terror financing.

The pair’s link to shell companies in the British Virgin Islands and other offshore financial centers was revealed for the first time after the reporters’ examination of Paradise Papers, a trove of leaked documents obtained by Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists in 2017.

The 13.4 million files include incorporation documents, emails, contracts and other records from two offshore service providers and the company registries of some of the world’s most secretive countries.

The Austrian man was listed as the director of several companies in the BVI, Malta and the Bahamas, the media report said. His address on the documents referred to an apartment in Vienna that belongs to the wife of one of the main suspects in the police investigation, according to a review of Austria’s land registry records.

By cross-checking the confidential files with property records, the reporters also found that the shell companies owned properties in the U.K., including two office buildings, a commercial property and a retail park, worth about $73 million in total.

The documents show that a Liechtenstein trust owned by the Saudi businessman was behind those companies. The man is also known as a philanthropist who has financed Islamic studies at various European universities in recent years, including in Austria, the report added.

The complex offshore structure identified by the journalists is legal, the report said, but “can be used to disguise the flow of money and the identity of the true economic beneficiaries.”

Profil and Ö1, two ICIJ media partners in Austria, asked the Viennese suspect about the purpose of the offshore company network and his link with the Saudi billionaire. A lawyer representing him declined to comment.

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