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* HSBC, StanChart shares fall to 22-year lows
* Falls follow reports on movements of allegedly illicit
funds
* Banks say have complied with all regulations
* Bank shares fall amid wider selloff in stocks
(Updates share reaction, adds comment)
By Alun John, Sumeet Chatterjee and Lawrence White
HONG KONG/LONDON, Sept 21 (Reuters) - HSBC's shares in Hong
Kong and Standard Chartered's in London fell on Monday to their
lowest since at least 1998 after media reports that they and
other banks, including Barclays and Deutsche Bank, moved large
sums of allegedly illicit funds over nearly two decades despite
red flags about the origins of the money.
The BuzzFeed and other media articles were based on leaked
suspicious activity reports (SARs) filed by banks and other
financial firms with the U.S. Department of Treasury's Financial
Crimes Enforcement Network (FinCen).
HSBC shares in London fell as much as 5% to 288
pence, their lowest intraday level since 2009, after the
lender's Hong Kong shares earlier touched a 25-year
low. The stock has now nearly halved since the start of the
year.
StanChart dropped as much as 4.6% in London to its
lowest since 1998, against the backdrop of a broader selloff in
the market with the STOXX European banks index down
4.8%.
More than 2,100 SARs, which are in themselves not
necessarily proof of wrongdoing, were obtained by BuzzFeed News
and shared with the International Consortium of Investigative
Journalists (ICIJ) and other media organisations.
In a statement to Reuters on Sunday, HSBC said "all of the
information provided by the ICIJ is historical." The bank said
that as of 2012 it had embarked on a "multi-year journey to
overhaul its ability to combat financial crime."
StanChart said in a statement it took its "responsibility to
fight financial crime extremely seriously and have invested
substantially in our compliance programmes".
Barclays said it believes it has complied with "all
its legal and regulatory obligations, including in relation to
U.S. sanctions."
The most number of SARS in the cache related to Deutsche
Bank, whose shares fell 5.2% on Monday. In a
statement on Sunday, Deutsche Bank said the ICIJ had "reported
on a number of historic issues."
"We have devoted significant resources to strengthening our
controls and we are very focused on meeting our responsibilities
and obligations," a spokesperson for the bank said.
London-headquartered HSBC and StanChart, among other global
banks, have paid billions of dollars in fines in recent years
for violating U.S. sanctions on Iran and anti-money laundering
rules.
The files contained information about more than $2 trillion
worth of transactions between 1999 and 2017, which were flagged
by internal compliance departments of financial institutions as
suspicious.
The ICIJ reported the leaked documents were a tiny fraction
of the reports filed with FinCEN. HSBC and StanChart were among
the five banks that appeared most often in the documents, the
ICIJ reported.
"It confirms what we already knew – that there are huge
numbers of SARs being filed with relatively low numbers of cases
brought through to prosecution," said Etelka Bogardi, a Hong
Kong-based financial services regulatory partner at law firm
Norton Rose Fulbright.
COMBATING FINANCIAL CRIME
The SARs showed that banks often moved funds for companies
that were registered in offshore havens, such as the British
Virgin Islands, and did not know the ultimate owner of the
account, the report said.
Staff at major banks often used Google searches to learn who
was behind large transactions, it said.
In some cases the banks kept moving illicit funds even after
U.S. officials warned them they could face criminal prosecutions
if they continued to do business with criminals or corrupt
regimes, it said.
Global banks in the recent years have boosted investments on
technology and staff to deal with tighter anti-money laundering
and sanctions regulatory requirements across the world.
Thousands of clients were booted out of bank accounts in
major wealth hubs including Hong Kong and Singapore after a
money laundering scandal in Malaysia, the 'Panama Papers'
expose, and a global push for tax transparency.
FinCen said in a statement on its website on Sept. 1 that it
was aware that various media outlets intended to publish a
series of articles based on unlawfully disclosed SARs, as well
as other documents.
(Reporting by Alun John, Sumeet Chatterjee and Donny Kwok in
Hong Kong and Lawrence White in London; Editing by Stephen
Coates, Raju Gopalakrishnan and Louise Heavens)
