The shares of two global banks dropped during Monday trading amidst the allegations that they moved large amounts of ‘suspicious funds’ in nearly 20 years.
Shares of HSBC slipped by 3.23% while Standard Charter fell by 2.96%. According to the confidential documents in the US government’s custody, HSBC and Standard Chartered are among the global banks that moved illicit funds from suspicious sources in nearly two decades. The information was based on the financial records submitted by banks to the US Department of Treasury.
Standard Chartered explained that there is always a possibility that people will try to evade sanctions in an attempt to launder money. Both HSBC and Standard Charter said that they have been implementing measures to curb financial crimes.
Global Banks Moved Questionable Money
Over the weekend, several global lenders were put in the spotlight with their involvement in questionable transactions over the years. The media obtained copies of confidential suspicious activity reports (SAR) of banks, which showed the illicit funds movement.
Global lenders such as HSBC, Deutsche Bank, Standard Chartered, JP Morgan Chase, and Bank of New York Mellon were the most mentioned banks in the financial documents. The reports revealed that the banks identified in the papers had processed transactions amounting to at least $2 trillion from 1999 to 2017.
Some of the financial transactions in the report are funds passed through HSBC that was traced from a Ponzi scheme, money from corrupted people and companies were processed by JPMorgan, and cash from a Ukrainian billionaire that was handled by Deutsche Bank.
The questionable transactions in the SARs do not pinpoint any wrongdoing among the banks. But it provided a glimpse of the challenges faced by the banking system in tracking these illegal activities.
Under the existing policy of the US Department of Treasury, a financial institution must file SARs within 60 days after detecting a dubious transaction. However, the leaked reports revealed that there are instances that the global lenders did not report the transaction within the prescribed period. Some banks only declared the transactions years after they processed it.
Some financial experts believed that the US government might impose fines against HSBC, Standard Chartered, and other global banks involved in ‘suspicious funds.’ Other experts saw it as a wake-up call for decision-makers to implement reforms in the financial system to make it more capable of fighting financial crimes.