That means trouble for cryptocurrencies: The FinCEN files show that banks around the world laundered trillions of dollars, even though they had at least one suspicion that the sources of the money were dubious. The system of preventing money laundering by central actors seems to have failed terribly.
You have probably already heard of the FinCEN files. That is around 22,000 pages of documents and tables, which mainly consist of suspicious transaction reports, through which banks worldwide reported to the US authority FinCEN. These reports cover all forms of money laundering, whether related to fraud, drug trafficking, terrorism, other illegal activities or financial sanctions.
The FinCEN files were leaked to the US portal BuzzFeed . She then shared it with the International Consortium of Investigative Journalists (ICIJ) and 108 other editorial offices in 88 countries. These editorial offices worked on the files for around a year. Now they are starting to reveal their results.
Even the Crypto Queen washes her money in banks
Transactions in excess of $ 2 trillion have been reported as suspicious, according to the FinCEN Files. They come from 100 countries, affect 35 political leaders and all major industries.
BuzzFeed sums up what has been learned from the files: “The largest banks in the world know exactly when their accounts are used to fuel a shadow economy of corruption and money laundering. Executives and employees regularly ignore alarm signals and internal warnings about suspicious accounts and process transactions for convicted fraudsters, drug dealers, gangsters and terrorists. The money laundering departments cannot assert themselves in the banks. And the financial supervisory authority can no longer keep up with the large number of reports. ”
The German economy occupies a sad top position: With a volume of 1.3 trillion dollars, Deutsche Bank is by far the number one money-laundering institution in the world.
Even the “Cryptoqueen” Ruja Ignatova did not use cryptocurrencies, but the banks to launder money. The Black Forest woman with a Bulgarian background stood with OneCoin at the top of one of the largest investment systems in history, which is globally suspected of being a pyramid system. She and her co-founders have raised billions of euros by claiming to manage a cryptocurrency that is “the next bitcoin.” They sent those billions around the globe through banking. Even suspicious transaction reports submitted by banks since the beginning of 2016 could not stop this.
The system doesn’t work
The oligarchs, drug dealers, tax evaders, terrorists, fraudsters and so on, all the criminals and unscrupulous and powerful who plunder or burn the world – they don’t need Bitcoin or any other cryptocurrency to launder their money. The banks are happy and willingly do this for them, and no control measures seem to be able to prevent them from doing so.
Every bank has a duty to precisely determine the identity of its customers. She has to follow an increasingly strict list to check whether a transaction is suspicious. If so, the bank must report the transfer to a supervisory authority, for example FinCEN in the USA. But this system has failed in the fight against money laundering to a large extent. Banks submit suspicious activity reports far too late, the authorities do not exchange data internationally and cannot keep up with processing the reports.
The system appears to fail to prevent money laundering. Even after banks have had to pay fines, even after they have tidied up and tidied up several times, even after using ever larger staff to fight money laundering – even then the big banks of this world process the transfers from criminals. Sometimes this happens out of ignorance, sometimes because the authorities have unclear guidelines – but often simply because a dishonest employee simply wants it. No control, however close-knit, can prevent this.
“Worse than useless”
Bitcoin intellectual Andreas Antonopolous calls the existing measures against money laundering “worse than useless”: They not only help nothing at all – despite the increasingly strict measures, money laundering continues to take place – but also cause damage. They exclude millions, if not billions, of people from the financial system and give corrupting power to regulators and banks. The measures are like ineffective medicine with strong side effects.
A lot of people who are into cryptocurrencies will see this FinCen leak as vindication and proof that banks are money launderers.
But, this will be used against cryptocurrencies…
— Andreas ☮ ? ⚛ ⚖ ? ? ? ? ? ? (@aantonop) September 21, 2020
As a Bitcoiner you could rejoice: Don’t the FinCEN files prove that you have always been right? That it is not the Bitcoin ATMs hunted by BaFIN through which money is laundered, but rather the widely courted banks? That you have to clean up the Deutsche Bank instead of tinkering with Bitcoin and cryptocurrencies with ever new laws and regulations?
As Andreas Antonopolous warns, Bitcoiners have little reason to cheer like this: “But despite the obvious truth, nothing will change. Indeed, this report will be used to tighten controls and monitoring. If something doesn’t work in government, MORE of it is prescribed. So all of this will result in stricter AML / CTF rules ”. Again, such new rules will not prevent money laundering, but they will make banking even worse for the poor and excluded. “It won’t stop criminals from committing crimes. It will only keep the poor from escaping poverty. ”
Of course, this regulation will also extend to Bitcoin. When bankers and politicians meet, the lowest common denominator in the fight against money laundering will likely be that one has to act more strictly against “crypto assets”. The instrument that was least involved will be the most strictly regulated.
Bitcoin’s greatest sin
However, cryptocurrencies are evading the race for the strictest, most hostile regulation. You just can’t regulate cryptocurrencies like banks. This will make Bitcoin and Co the natural alternative, if the banking system is regulated even further, and this alternative will become more and more important, maybe even vital or vital for more and more people.
The FinCEN files make it more or less inevitable that more people will use cryptocurrencies in the future. This is a compelling consequence of governments prescribing more of something when it doesn’t work. Bitcoin does not cure money laundering any more than the banks’ KYC measures – but it does alleviate the side effects that it entails.
But even that doesn’t necessarily have to be a reason for Bitcoiners to cheer. Perhaps it is rather a reason to be afraid. Bitcoin becomes a “systematic threat”, as Andreas Antonopolous writes, “not an economic threat to national money, but to the control and monitoring system of geopolitical money”.
Bitcoin is money that is out of control. In other words, Bitcoin doesn’t allow governments to pretend they can change anything, even if they only make things worse. Not to tolerate this deception could be the sin of cryptocurrencies, which governments cannot forgive.