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* HSBC, StanChart shares fall to 25-year lows
* Fall follows reports on movements of allegedly illicit
funds
* Banks say have complied with all regulations
* Bank shares fall amid wider selloff in stocks
(Recasts, adds U.S. banks, further reaction)
By Alun John, Sumeet Chatterjee and Lawrence White
HONG KONG/LONDON, Sept 21 (Reuters) - Global banks faced a
fresh scandal about dirty money on Monday as they sought to
limit the fallout from a cache of leaked documents showing they
transferred more than $2 trillion in suspect funds over nearly
two decades.
Britain-based HSBC, Standard Chartered and
Barclays, Germany's Deutsche Bank and
Commerzbank, and JPMorgan Chase & Co and Bank
of New York Mellon Corp were among the lenders named in
the report by the International Consortium of Investigative
Journalists and based on leaked documents obtained by BuzzFeed
News.
While some banks said many of the transactions happened a
long time ago, and they had since put robust anti-money
laundering checks in place, investors were clearly worried.
HSBC and StanChart shares touched their lowest level in as
much as 25 years, although they fared little worse than their
peers amid a wider selloff in global stocks..
The reports were based on 2,100 leaked suspicious activity
reports (SARs), covering transactions between 1999 and 2017,
filed by banks and other financial firms with the U.S.
Department of Treasury's Financial Crimes Enforcement Network
(FinCen).
Banks have spent billions bolstering their anti-money
laundering procedures in recent years after many faced huge
fines for rule breaches. They are required to file an SAR
whenever handling funds that cause grounds for suspicion of
criminal activity.
But an analysis of 2,100 SARS obtained by BuzzFeed News,
which worked with the International Consortium of Investigative
Journalists and other media organisations, found some reports
were filed months after the suspect transactions took place and
that often little other follow-up action was taken.
"This brings out the point that managing financial crime
risk goes beyond making SARs," said Etelka Bogardi, a Hong
Kong-based financial services partner at Norton Rose Fulbright.
Shares of Deutsche Bank, which was involved in the largest
number of SARs in BuzzFeed's dossier, were down more than 8% at
one point on Monday morning following the reports.
'ROBUST ACTION ON DIRTY MONEY'
The bank said the issues raised were "historic", while the
German Finance Ministry said on Monday that the cases linked to
Germany in the reports had already been dealt with.
Many of the suspicious transactions were linked to companies
incorporated in Britain or offshore British territories,
prompting calls from action groups for tougher rules.
"If the government cares at all about the UK's reputation
globally, it must stop rolling out the red carpet to the
criminal and corrupt, and refuse to legitimise their money
through our companies and banks,” Global Witness said,
The UK government said in a statement that "criminals should
not be able to profit from their illegal activities in any
circumstances, and we have taken robust action in recent years
to crack down on dirty money".
It added that it was working on reforms to its corporate
registry system that will require more checks on company
directors.
HSBC, whose shares fell as much as 6%, also said the
information in the reports was historic, while Standard
Chartered, which dropped by 5%, pointed to recent investments to
improve its control procedures.
Shares of JPMorgan and Bank of New York Mellon, who were
also in the top-five banks mentioned most frequently in the
reports, fell 2.6% and 2% respectively.
BNY Mellon told Reuters it could not comment on specific
SARs but that it fully complied with all "all applicable laws
and regulations". JPMorgan said it has "thousands of people and
hundreds of millions of dollars dedicated to this important
work."
MAJOR WEALTH HUBS
Global banks in the recent years have boosted investments in
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.
Compliance experts said that part of the problem now was
banks were struggling to distinguish between transactions that
were and were not suspicious, so were simply filing millions of
SARS that enforcement agencies lack the capacity to deal with.
"Lots of banks are struggling with high false positive rates
and the backlog [of existing cases]. That's why you see that
sometimes SARs were raised over 100 days after the transaction,"
said Cliff Lam, a director at AlixPartners in Hong Kong.
(Reporting by Alun John, Sumeet Chatterjee and Donny Kwok in
Hong Kong and Lawrence White, Ritvik Carvalho, Sujata Rao and
Karin Strohecker in London; Editing by Raju Gopalakrishnan,
Louise Heavens and Pravin Char)
