Shares in the banking sector fell on Monday after media reports that some of the world’s largest banks had moved large sums of allegedly illicit funds over nearly two decades, despite red flags about the origins of the money.
Barclays fell by 4% in early trading in London and HSBC and Standard Chartered both lost 3%. Earlier in Hong Kong, HSBC dropped more than 4%, taking the shares to their lowest level sinceMay 1995.
The drop came after thousands of documents detailing $2tn (£1.55tn) of potentially corrupt transactions that were washed through the US financial system were leaked to an international group of investigative journalists.
Media reports were based on more than 2,000 leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen).
Banks and other financial institutions file SARs when they believe a client is using their services for potential criminal activity.
However, the filing of an SAR does not require the bank to cease doing business with the client in question.
The documents were provided to BuzzFeed News, which shared them with the International Consortium of Investigative Journalists (ICIJ).
The documents are said to suggest big banks provided financial services to high-risk individuals from around the world, in some cases even after they had been placed under sanctions by the US government.
According to the ICIJ the documents relate to more than $2tn of transactions dating from between 1999 and 2017.
One of those named in the SARs is Paul Manafort, a political strategist who led Donald Trump’s 2016 presidential election campaign for several months.
He stepped down from the role after his consultancy work for former Ukrainian president Viktor Yanukovych was exposed, and he was later convicted of fraud and tax evasion.
HSBC and Standard Chartered were among the five banks that appeared most often in the documents, the ICIJ reported.
HSBC said in a statement that “all of the information provided by the ICIJ is historical.” The bank said starting in 2012, “HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions.” It said at the end of 2017, the US justice department “determined that HSBC met all of its obligations … HSBC is a much safer institution than it was in 2012.”
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Barclays said it “complied with all our legal and regulatory obligations including in relation to US sanctions”.
It added: “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 said: “We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes.”