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Big Banks Are Knee-Deep in the Dirty Money-Laundering Business

U.S. and UK financial firms are pretending they haven't been deeply involved in the dark side of banking.

Photo Credit: Lang


Money-laundering issues at U.S. and UK financial firms shed light on role of rich nations and elite banks in the offshore world.

In the summer of 2009, Jennifer Sharkey was moving in select company. As a Manhattan-based vice president at JPMorgan Chase & Co.'s Private Wealth Management group, she juggled relationships with 75 "high net worth" clients with assets totaling more than half a billion dollars.

Things changed for her, she claims, after she raised doubts about a "suspect" foreign client who had millions stashed in various accounts at the bank.

The client was making questionable cash transfers and concealing who actually owned certain accounts, according to a lawsuit Sharkey is pursuing in federal court in Manhattan. She also found evidence, her suit claims, that the client had falsified financial statements for one of his companies and that he'd been involved in the "unexplained disappearance" of millions of dollars in merchandise in another venture.

After she warned high-level bank officials that the client might be involved in fraud and money laundering, her suit claims, JPMorgan moved to silence her — pressuring her to stop raising questions about the client, assigning her other clients to junior colleagues and, finally, firing her.

"I was just doing my job," Sharkey said in an interview with the  International Consortium of Investigative Journalists (ICIJ). But for the bank, she said, "it was more important to keep this client than to do the right thing."

JPMorgan denies it retaliated against Sharkey for pushing the bank to exit its relationship with the client — and it denies that the customer was either a foreign client or engaged in suspect activities. The bank says it goes to great lengths to identify and block money laundering, terrorism financing and other illicit transactions.

Sharkey isn't alone, though, in raising concerns about the largest U.S. bank's commitment to fighting the flow of dirty money around the world.

Over the years, JPMorgan Chase and its corporate forebears have been accused of serving as conduits for money controlled by drug smugglers, mobsters and political despots and acting as magnets for "flight capital" from rich tax dodgers from Latin America and other regions. The bank also played a part, lawsuits alleged, in massive tax haven-enabled frauds in the Enron and Madoff scandals.

An examination of JPMorgan's record in policing suspect cash and offshore deals offers a case study of how big banks deal with dirty money and transnational corruption — and a window onto the  decades-long history of the banking industry's fraught relationship with the offshore world.

When people think about secret accounts and money laundering, they often imagine the Cayman Islands or some other sultry paradise. But the enablers of cross-border corruption aren't located only in flyspeck island havens, white-collar crime experts say.

Criminals and connivers rely on easy access to banks in the U.S., the UK and other rich nations to  hide their assets from investigators and tax collectors and  shift moneyin and out of offshore hideaways.

Without this access, their shell games wouldn't be possible.

In 2003, New York prosecutors claimed that an unlicensed money-transfer firm in Manhattan directed $9 billion in wire transactions through three dozen accounts at JPMorgan,  moving money around the world for drug dealers and other dodgy characters.

In 2011, the bank paid nearly $90 million to settle regulators' claims that it had violated economic sanctions against Iran, Cuba and other countries under U.S. embargoes.

In January, a consent order from JPMorgan's main federal regulator, the Office of the Comptroller of the Currency, cited the bank for "critical deficiencies" in its anti-money-laundering controls, including inadequate procedures for monitoring transactions at foreign branches.