Simoney Kyriakou  

How should regulators respond to scandal?

Simoney Kyriakou

Simoney Kyriakou

The internet has been replete with commentary on the ‘FinCen papers’ for the past week, and not without reason

As more allegations and revelations come out about banks and other institutions knowingly permitting ‘dirty money’ to circulate in the system, questions have to be asked.

No doubt the US Financial Crimes Enforcement Network is asking questions about how the leak of thousands of suspicious activity reports ended up on the front pages of international newspapers, via the International Consortium of Investigative Journalists.

Shortly after its warning note on September 1, in which it said: “The unauthorised disclosure of SARs is a crime that can impact the national security of the US, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports,” FinCen sought public comment on a range of questions relating to potential regulatory amendments under the US Bank Secrecy Act.

In other words, how to tighten up anti-money laundering programmes. Purely coincidental?

The US is not alone. Government bodies and regulators across the world are also asking questions of themselves and their own financial regulatory structures, as the leak and its ramifications cause necessary navel-gazing.

Quite rightly, Mel Stride, chairman of the Treasury Committee, has written a sternly worded letter to the Financial Conduct Authority, government ministers and HM Revenue & Customs following the publication of the files.

Mr Stride has asked Chris Woolard, interim chief executive of the FCA, what action the watchdog was taking following the publication of the files. Other questions put to Mr Woolard include what needs to be done to “further secure” the financial system from economic crime, and whether reports the UK was a “higher-risk” jurisdiction were a cause for concern.

As with the Panama Papers back in 2016, which exposed rogue offshore financial companies and brought down heads of state as their involvement was revealed, and the Paradise Papers in 2017, which told the world the names of the wealthy elite who were shoring their assets a little too tax-efficiently, the FinCen revelations will not die down any time soon.

Social media will ensure this is the case. Had this happened 20 years ago even, the widescale spread of information simply could not have happened. People would have read of the allegations in the print media and, within a week or so, it would all be tomorrow’s chip paper.

But social media amplifies this and provides a platform for any and all to offer their commentary on the news. It is a field day on Twitter for campaigners who have long argued their case of collusion between banks to allow dodgy dealings to go on. And whistleblowers whose cases would have been forgotten have raised their heads again to join the chorus of disapproval.