Money & Banking

Bank stocks hit as US FinCEN flags ‘suspicious’ deals at most lenders

Our Bureau Mumbai | Updated on September 21, 2020

No proof of any violation, but deals could be linked to money laundering, terrorism, drugs

Bank stocks took a beating on Monday as the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) flagged as “potentially suspicious” 406 transactions involving almost all major Indian lenders .

The data, obtained by the International Consortium of Investigative Journalism (ICIJ) from the Suspicious Activity Reports (SARs) filed by American banks between 2005 and 2017 reveal that almost all major Indian banks — public, private and foreign — were flagged for these transactions. These could relate to activities such as money laundering, terrorism and drugs.

In all, it has listed 26 Indian lenders including State Bank of India, Punjab National Bank, Union Bank, ICICI Bank, HDFC Bank, Axis Bank, Standard Chartered (India) and Deutsche Bank. They were involved in transferring a total of $406,278,962 out of the country and receiving $482,181,226 into the country.


This, and other news such as a one-time rejig of Covid-hit loans, sent banking stocks buckling, with IndusInd Bank dipping 9.6 per cent to hit an intra-day low of ₹554. Punjab National Bank (6 per cent) and IDFC First Bank (6.4 per cent) were the other key losers. SBI, HDFC Bank, Federal Bank, Bank of Baroda, Axis Bank and ICICI Bank were down, too.

Processed by 3 US banks

The ICIJ reports revealed that “these transactions were processed via three US-based banks, which filed suspicious activity reports with FinCEN.”.

Some of the large value transactions include the transfer of $119,548,135 from DBS Bank to Bank of India through 19 transactions.

Similarly, between October 25, 2012 and November 26, 2012, Deutsche Bank AG transferred $53,520,418 to Deutsche Bank.

Global scenario

The ICIJ investigation revealed that over an 18-year period, banks moved over $2 trillion globally, which they believed were suspicious. Some of the banks named include JPMorgan Chase, HSBC, Barclays Bank, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon.

ICIJ said the Suspicious Activity Reports only describe potential illegal activity and are not considered to be, and do not purport to be, proof of any violation of the law.

Responding to the FinCen files, Deutsche Bank said, on its website, that “the ICIJ has reported on a number of historic issues. Those relating to Deutsche Bank are well known to our regulators. The issues have already been investigated and led to regulatory resolutions in which the bank’s cooperation and remediation was publicly recognised.”


Published on September 21, 2020

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