There has been yet another embarrassing leak of controversial financial information, this time related to the U.S. Department of Treasury's bureau of the Financial Crimes Enforcement Network (FinCEN).
While a growing list of similar incidents have occurred in recent history (see: 2014 Luxembourg Leaks, 2014 Swiss Leaks, 2016 Panama Papers, 2017 Paradise Papers and the cumulative body of WikiLeaks), this leak is somewhat unique in that it contains details about confidential regulatory reports (i.e. Suspicious Activity Reports) that were filed by financial institutions and intended only for use by FinCEN, U.S. Law Enforcement authorities or other Financial Intelligence bodies around the world (on a discretionary basis).
From what is currently known, the 2,500 leaked reports (filed between 1999 and 2017) may not be the last in the trove of information that was provided to BuzzFeed News and the International Consortium of Investigative Journalists (ICIJ). According to FinCEN's own SAR statistics, there were a total of 21 million SARS filed between 1999 and 2017 - indicating that the leak represented far fewer than 1 percent of total filings over the same time period.
While the volume of documents may be relatively low for the time being, it is important to take note of the following unintended (or perhaps intended) consequences that may result:
- The reports may inadvertently paint Compliance professionals at these financial institutions in a negative light despite the fact that they are (and have been) acting in a fiduciary capacity (for FinCEN)
- The leaked documents explicitly name a number of financial institutions and provide details that may allow bad actors to infer specific gaps in the internal controls in place at those very institutions
- This leak has exposed FinCEN at the moment, but we do not know whether or not there are other compromised systems within the U.S. Treasury Department (the body that oversees FinCEN)
- The leaked documents have now put certain named entities (that have been under suspicion) on notice, which in many ways is contrary to the objectives of the SAR filing program
For Financial Crimes prevention practitioners, or those interested in the topic - please read onward to find out more about the "FinCEN Files" leak.
The FinCEN files are more than 2,500 documents, most of which were files that banks sent to the US authorities between 2000 and 2017. They raise concerns about what their clients might be doing. These documents are some of the international banking system's most closely guarded secrets.