JPMorgan Chase, HSBC, Barclays, Standard Chartered, Deutsche Bank and Bank of New York Mellon are among the financial institutions accused of moving assets of alleged criminals in a damning report released at the weekend by the International Consortium of Investigative Journalists.
Shares in several banks fell following the report. Barclays' share price dropped four per cent in early trading in London on Monday, while HSBC and Standard Chartered similarly declined by about three per cent.
The new report is based on leaked documents obtained by BuzzFeed. The investigation was carried out by 108 media outlets from 88 different countries, including BBC's Panorama.
The report examined 2,100 "suspicious activity reports" – which banks must file when handling funds that could cause grounds for suspicion of criminal activity – filed between 1999 and 2017 with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Deutsche Bank said the revelations were “well known” to its regulators and it had “devoted significant resources to strengthening our controls”, as well as focusing on “meeting our responsibilities and obligations”.
HSBC said “all of the information provided by the ICIJ is historical”. It stated that, starting in 2012, it had "embarked on a multiyear journey to overhaul its ability to combat financial crime across more than 60 jurisdictions", adding that the bank is now "a much safer institution than it was in 2012".
The bank has since told its staff to stop posting on its social media accounts over fears of a backlash.
Barclays said it “complied with all our legal and regulatory obligations including in relation to US sanctions”, adding: “Criminal activity which may seem obvious with hindsight is often only uncovered as a result of careful evidence-gathering after the event in question has occurred or after a SAR has been filed. If we conclude we have financial crime concerns, we take appropriate action and have done so in numerous cases over the years.”
Standard Chartered stated: “We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes.”
JPMorgan Chase, which is alleged to have said it was "legally precluded from commenting on most of the details" in the inquiry. The company pointed out it acknowledged in a 2014 report that its existing anti-money-laundering controls "needed improvement" and it has "since devoted considerable resources to comply with the laws and regulations governing anti-money laundering, terrorist financing and economic sanctions".
BNY Mellon said it “takes its role in protecting the integrity of the global financial system seriously, including filing suspicious activity reports". "As a trusted member of the international banking community, we fully comply with all applicable laws and regulations, and assist authorities in the important work they do. By law, we cannot comment on any alleged SAR we may have filed or that may have been illegally disclosed by third parties to the media.”
Two PR professionals give their views on how the crisis has been handled by the banks and what they should do next from a comms perspective.
Chris Calland, director, Sapience Communications
“The impact the case is likely to have on the reputation of the banks named, and on the sector in general, depends on which audience you are talking about. Will ordinary retail banking customers close their accounts because of these allegations? I’m not so sure. But corporates and politicians will start asking probing questions.
“What the banks need to repair the reputational damage, therefore, is a stratified approach. This is not the same as after the Banking Crisis, where banks that had been bailed out by all of us had to appeal to all of us. Yes, all consumer PR activity should be sense-checked in light of the allegations, but that is not the field of play on which reputations will be repaired. The communications response should primarily be one of effective stakeholder relations.
“So, no big campaigns drawing attention to the allegations. Instead, plenty of direct communication with stakeholders, offering them as much information as possible and a genuine willingness to work with them to devise policy responses. But internal comms is integral to this too, both to genuinely learn any lessons, but also to minimise the damage to morale that could hamper business performance.”
Del Jones, director, Headland
"Banks have been recognised for prioritising the wellbeing of their customers and employees during the pandemic. The FinCEN leaks may put some of this progress in jeopardy, but at this stage it’s hard to say if the story will build in traction and have a similar impact to the Panama Papers story. The external context works against that happening.
"Financial crime usually takes the form of a scam targeting vulnerable people rather than a complex multi-jurisdictional transaction. Last year nearly 85,000 British people were tricked into giving away their money to a fraudster, so this is an issue which millions have experienced either directly or indirectly through a family member. And the problem is growing, with the emergence of scams targeting COVID-19 fears.
"The major banks have signed up to a voluntary code to protect innocent victims of these scams, but most still fall short of a 100 per cent reimbursement rate. In the long run, the general public are more likely to judge banks on how they treat customers who have been the victims of financial crime."