In recent weeks, over 2,500 documents from the US Financial Crimes Enforcement Network (FinCEN) have been leaked. This explosive material outlines how over $2 trillion worth of transactions made by some of the world's largest banks and financial institutions between 2000-2017 have facilitated money laundering.
In one case, it was revealed that the husband of a woman who had donated £1.7m to the Tory Party was secretly funded by a Russian oligarch with close ties to President Putin.
Elsewhere, the documents show that Deutsche Bank has moved dirty money for organised criminals, terrorists, and drug traffickers.
Not the first
This leak is only the latest in a series of such revelations that have taken place in recent years.
In April 2016, the Panama Papers showed how the now defunct law firm Mossack Fonseca helped its wealthy clients – including public officials and famous celebrities – to evade tax and international sanctions, and in some cases commit fraud.
Most of the leaked FinCEN documents consist of suspicious activity reports (SARs) filed to US regulators over 17 years. These outline concerns that financial institutions have concerning suspicions that a money laundering or terrorist financing offence is being committed.
The problem with this system is that many financial institutions simply treat SARs as a box-ticking exercise, designed to meet the minimum required standard. And it is widely understood in the financial industry that most yearly SARs don’t even get read by the regulators.
For example, in 2019, Transparency International estimated that only 80 UK staff were tasked with investigating more than 460,000 SARs for that year.
Public scrutiny of corruption within financial services is at an all time high.
Capitalism is in the middle of its worst crisis in history. Millions of ordinary workers worldwide are losing their livelihoods and futures due to the COVID-triggered crisis. And yet we have the obscene sight of the world’s wealthiest individuals – and their servants in the banks and hedge funds – profiting from the crisis.
Political pressure on the financial sector has increased steadily in recent times. And numerous financial crime prevention and anti-money laundering laws have been passed in countries internationally over the past 10 years.
Corruption and criminality within the world’s major financial institutions, however, has remained constant – even after the 2008 financial crisis and the (supposedly) fundamental changes and regulations brought about in its aftermath.
Over the past few years, many financial institutions – including some of the same ones listed in the recent FinCEN leaks – have been found guilty of the most shocking money laundering crimes. And yet nothing fundamental has changed.
For example, it was only a few years ago that HSBC was found to have facilitated the laundering of billions of dollars for Mexican drug cartels. Other subsidiaries of the bank, meanwhile, moved money from Iran, Syria, and other countries on US sanctions lists, as well as helping a Saudi bank linked to al-Qaeda to shift money to the US.
It is incredibly rare for a major figure in a bank or financial institution to actually be jailed for their role in these crimes. The usual outcome is a half-hearted apology, a few resignations, and an affordable fine.
In fact, such fines provide a useful stream of income for governments worldwide. The majority of the UK Financial Conduct Authority’s fines go to the Treasury. And the same is true of the fines issued by the US Securities and Exchange Commission.
In other words, capitalist states have no real intention of putting most of these corrupt financial institutions out of business. Instead, regular fines are a useful way to skim off some of the profits made by big business and redirect it to state coffers.
Heroes and villains
In many ways, the illegal commercial activity and money laundering that the world’s major financial institutions have (knowingly and unknowingly) facilitated is only the other side of the coin of the legalised exploitation and corruption that takes place every day under capitalism.
Capitalism is a system based on the extraction of profits from the working class, for the benefit of a super-rich elite. The purpose of bourgeois law, and the whole apparatus of the state, is to enable this process.
Illegal profiteering and racketing exist to match their legal counterpart. The only fundamental difference is the lack of any pretense of morality or fairness by the criminals. Whilst the former group is given a slap on the wrist, the latter are lauded as ‘entrepreneurs’, encouraged by politicians to continue their exploits.
What the capitalists really want is a greater slice of the profits that the criminals make. And they would have this, were it not for the moral and political obstacles in their way.
Billionaire Richard Branson, for example, has openly talked about his desire for the legalisation of Cannabis. Branson has no interest in seeing an end to the punitive and discriminatory criminalisation of ordinary workers. But his dream is obviously to produce such drugs on a capitalist basis; to monopolise production and make even more obscene sums of money for himself.
Nationalise the banks
We cannot trust financial regulators, capitalist states, and big business politicians to solve the question of crime and corruption within society. These evils stem from the capitalist system itself and its relentless pursuit of profits. Only a fundamental transformation in society can eliminate them.
The trillions of dollars held by the capitalists – and their criminal counterparts across the world – must be expropriated and put to the use by the working class, for the working class.
Only by nationalising the banks, financial institutions, and major monopolies under workers’ control and management, as part of a democratic socialist plan, can we root out all corruption and criminality once and for all.
The FinCEN leaks demonstrate once again that capitalism is corruption. Leon Trotsky’s words in the Transitional Programme on this question therefore remain as relevant now as ever:
“To those capitalists, mainly of the lower and middle strata, who of their own accord sometimes offer to throw open their books to the workers — usually to demonstrate the necessity of lowering wages — the workers answer that they are not interested in the bookkeeping of individual bankrupts or semi-bankrupts but in the account ledgers of all exploiters as a whole.
“The workers cannot and do not wish to accommodate the level of their living conditions to the exigencies of individual capitalists, themselves victims of their own regime.The task is one of reorganising the whole system of production and distribution on a more dignified and workable basis. If the abolition of business secrets is a necessary condition to workers’ control, then control is the first step along the road to the socialist guidance of economy.”