FinCEN Files: US Banks Red-Flagged 44 Indian Banks for Suspicious Transactions Between 2011 and 2017

Hyderabad: Forty-four Indian banks have been flagged in connection with transactions by Indian entities and individuals in a set of Suspicious Activity Reports (SARs) filed by US banks. The reports were filed with the Financial Crimes Enforcement Network (FinCEN), a watchdog of the US Treasury Department The Indian Express reported.

Called the ‘’FinCEN files’, the material has led a new investigation into confidential U.S. Treasury documents shared by the International Consortium of Investigative Journalists (ICIJ) with BuzzFeed News and 108 other media outfits. The documents identified more than $2 trillion worth of transactions between 1999 to 2017 which were flagged in the more than 2,100 reports by nearly 90 financial institutions, as possible money laundering or other criminal activity.

SARs reflect the concerns of internal compliance officers within banks, as submitted to FinCEN.

The Indian Express report says that “as per one set of records where addresses linked to parties are in India, Indian banks figure in SARs linked to over 2,000 transactions valued at over $1billion (Rs 7,369 crore) between 2011 and 2017. Significantly, there are thousands of transactions linked to Indian entities and businessmen where the Indian senders or beneficiaries have addresses in foreign jurisdictions.”

Indian banks with suspicious transactions as alleged in the SARs include Punjab National Bank, State Bank of India, Bank of Baroda, Union Bank of India, Canara Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank, among others.

US banks that have filed SARs about Indian banks include Deutsche Bank Trust Company Americas (DBTCA), BNY Mellon, Citibank, Standard Chartered and JP Morgan Chase, among others.

The reported reasons cited by the foreign banks for reg-flagging their Indian counterparts were transactions described as “high-risk jurisdiction for money laundering or other financial crimes, adverse media or public information on the client, unidentified parties, and the fact that source of funds and purpose of transaction could not be ascertained.”

Transactions linked to Bhushan Steel Ltd, amounting to the tune of $4.39 million (Rs 32 crore) figure in SARs sent between 2012 and 2015 to FinCEN. The company was acquired by Tata Steel through an insolvency court in 2018.

According to the investigative reports, transactions of public sector entities like Hindustan Aeronautics Limited and The State Trading Corporation of India Limited and private majors Bharti Airtel and Essar, which have been under scrutiny by Indian investigative agencies, have been red-flagged in several SARs to FinCEN.

India’s Special Investigation Team (SIT) on black money is reportedly taking note of the suspicious transactions revealed in FinCEN files and is looking to hold a panel discussion to decide on the course of investigation in India. The SIT was formed in 2014 based on the directions of the Supreme Court.

In a statement before the publication of a series of articles based on SARs, FinCEN stated that “the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports.”

However, ICIJ and other media outlets have published their revelations based on the documents.

“They (FinCEN files) show banks blindly moving cash through their accounts for people they can’t identify, failing to report transactions with all the hallmarks of money laundering until years after the fact, even doing business with clients enmeshed in financial frauds and public corruption scandals,” the ICIJstated.

In another report, the newspaper revealed that the FinCEN files “uncovered a web of transactions of a flourishing money laundering network run by Pakistani national Altaf Khanani who is also said to have been a key financier for fugitive terrorist Dawood Ibrahim,” based on SARs filed by the Standard Chartered Bank in New York.

According to the investigative reports, five banks – Deutsche Bank, Bank of New York Mellon, Standard Chartered, JPMorgan and HSBC – repeatedly violated their official promises of good behavior. These banks, ICIJ reported, “kept profiting from powerful and dangerous players even after U.S. authorities fined these financial institutions for earlier failures to stem flows of dirty money.”

Placing the network in context, ICIJ said that the FinCEN files “represent less than 0.02% of the more than 12 million suspicious activity reports that financial institutions filed with FinCEN between 2011 and 2017.”