Journalists are all aflutter over a massive leak of banking documents by a former employee of FinCEN, the U.S. Treasury Department’s Financial Crimes Enforcement Network. The documents detail thousands of suspect banking transactions, and the narrative that has taken hold is that the world’s most important banks are witting criminal facilitators, helping everyone from Russian oligarchs to Islamist extremists move and launder cash around the world. The narrative is wrong. And while it was almost certainly unintentional, the FinCEN leaker has actually revealed the weakness and incompetence of U.S. financial crimes enforcement, rather than the malign agenda of global banking.
Among FinCEN’s expansive responsibilities is receiving and reviewing hundreds of thousands of suspicious activity reports, or SARs, as they are commonly known. In 2019, with around 300 employees, FinCEN received 2,751,694 SARs from 12,148 financial institutions. Despite these numbers, FinCEN is woefully underfunded: it operates on a yearly budget of about $118 million. By comparison, that same year small and midsize banks spent $25.3 billion on anti-money laundering compliance. Globally, compliance costs for banks and other financial institutions are around $180.9 billion. Bigger banks like JP Morgan alone spend up to $9 billion a year on what it calls “fortress controls” — an inexact number because of overlap between various compliance requirements — but which appears to include anti-money laundering, countering terrorism financing, compliance, and the salaries of as many as 43,000 professionals.
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