bank fiascos – Page 4 – Attestation Update

Update on Panama Papers – 4/19

Leave a Comment / Audits, Fraud, Other stuff, Pondering / By Jim Ulvog

Hasn’t been a lot of breaking news on the Panama Papers lately. Fair amount of follow-up though.

Here are a few articles of interest to me.

General update. How massive stories might be staffed in future.
More comments on the legitimate of offshore banking.
Senior government officials under the spotlight.

General update

4/9 – Fabius Maximus –Those Who Are (and Are Not) Sheltered From the Panama Papers – News we’ve heard thus far is likely just the tip of the iceberg of what will ultimately come out of the massive leak. Article pointed me to the following:

4/8 – Stratfor – Those Who Are (and Are Not) Sheltered From the Panama Papers – Most of the damaging information released to date hits the developing world the most. Yet the bigger impact in on the western countries where there is relatively little information.

Article starts with point that the news we’ve read so far is just the start. Also points out the big leaks are growing in frequency and volume over the last several years.

Very long article walks through on a country-by-country basis what has been revealed and how big an issue is present. A few things of interest to me:

Senior politicians are implicated in five of the former Soviet republics.

A number of current or former Politburo members in China have family members involved.

Article dives deep into the possible implications or lack thereof in each of many countries.

4/14 – New Yorker – The Panama Papers and the Monster Stories of the Future – The person leaking the story gave the material to a German newspaper, who did not have the staffing to handle the story.

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Update on Panama Papers – 4/19Read More »

More updates on Panama Papers leak. 4/14

Leave a Comment / Other stuff / By Jim Ulvog

Here are a few articles I found of interest in the last few days on offshore banking as revealed by the Panama Papers leak.

4/7 (from 4/9 print edition) – The Economist – A torrential leak – Not much news to me or to you if you’ve been reading my posts this week. This would be a great introduction if you have just tuned in.

A couple of tidbits. The law firm involved worked with around 14,000 law firms, incorporation companies, and banks, according to an estimate by ICIJ. Somewhere around 500 banks were involved in setting up companies. HSBC reportedly set up around 2,000 shell companies.

4/6 – Politico – Panama Papers pose ethics issues for U.S. prosecutors – Apparently there is a massive roadblock for the DoJ using all the materials in the data dump. Prosecutors are not allowed to even look at material that they think might be covered by attorney-client privilege. That makes it an issue to look at anything that came out of a law firm. Many documents are under attorney-client protection and almost all documents might be so covered.

4/6 – The Australian – Panama Papers: scary revelations for HSBC – …

More updates on Panama Papers leak. 4/14Read More »

There are more issues revealed by the Panama Papers leaks than just tax evasion. Some contrarian opinions on how to look at offshore banking.

Leave a Comment / Economics, Fraud, Pondering / By Jim Ulvog

The primary focus in media coverage is on tax evasion. There are other ways to look at the offshore industry. There are more and deeper legal issues involved. The tax evasion concerns under discussion are just the starting point on the list of issues that ought to generate irritation.

Following articles provide a variety of alternative views of what is going on in the Panama Papers leaks. That the articles I mention contradict each other illustrates my point that there are more issues involved than just tax evasion.

4/7 – Jason Zweig at Wall Street Journal – Panama Papers: A History of Tax Evasion from Ancient Rome to the French Revolution to 19th-Century New Jersey –

Question for you to ponder: Why have people been hiding their money for over 2,000 years?

In 1934 when Switzerland made it a crime for a banker to reveal a customer’s name, they were a bit behind the curve. Liechtenstein, Luxembourg, and Bermuda were tax havens a couple of decades earlier. As a depressing note, the Swiss offered confidentiality for a fee all the way back in 1789.

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There are more issues revealed by the Panama Papers leaks than just tax evasion. Some contrarian opinions on how to look at offshore banking.Read More »

Place ‘yer bets, place ‘yer bets! Which government do ya’ think will be next to fall? Place ‘yer bets now!

Leave a Comment / Other stuff / By Jim Ulvog

I was planning to wait a day or two before posting this, but realized better get it posted before it is overtaken by events.

Keep in mind the prime minister of Iceland has already resigned.

4/6 – Francine McKenna – Bookmakers set odds for next leader to resign after Panama Papers mention – How’s this for a commentary on the sad state of affairs? Irish bookie is setting odds for the next head of state to resign over revelations from the Panama Papers leak.

Current odds? …

Place ‘yer bets, place ‘yer bets! Which government do ya’ think will be next to fall? Place ‘yer bets now!Read More »

Oh, the things you can learn from the Panama Papers. Did you know that documenting ownership of a shell company through bearer stocks is even a real thing?

1 Comment / Fraud, Other stuff / By Jim Ulvog

Yes, it is actually possible to organize your offshore company with the ownership documented with bearer stocks. Join me as I dive into the fine details of a WSJ article.

4/6 – Wall Street Journal – Panama Papers: Hiding Cash Has Become Crummy Business – Even Switzerland has joined the crackdown on hiding money. Prosecutors there leaked information on the Malaysian scandal. That’s a whole other story that I won’t go into. The point is Swiss prosecutors are going after money launderers and embezzlers. Swiss prosecutors. You know, from Switzerland. Land-of-the-numbered-account Switzerland.

Initial follow-up to Panama Papers leak

Leave a Comment / Fraud, Other stuff / By Jim Ulvog

Previously mentioned the massive leak of data about offshore banking that hit headlines this past Sunday. This is now called either the Panama Papers or Panama leak, take your pick. Here are a few of the initial articles on the follow-up that I found interesting.

There are more and deeper issues than just tax evasion. By the way, the term we should be discussing is tax evasion, not tax avoidance. Avoidance means complying with the tax law in order to lawfully reduce your tax bill. Evasion means breaking the law.

Simple introduction to offshore banking

4/4 – Vox – The Panama Papers leak, explained with an adorable comic about piggy banks – Simple cartoon gives a great illustration of a little boy hiding some quarters from his mommy in a piggy bank stored in his little friend’s closet. Lots of other little boys to the same. Eventually the friend’s mommy finds all the piggy banks and calls all the moms.

Some of the little boys may just have wanted to hide a few extra quarters from mommy because they wanted some privacy. Others may have been stealing lunch money from their schoolmates and don’t want mommy to know. Some may have been stealing from mommy’s purse. Yet others may have been wanting to save up a couple of dollars to buy an actual surprise birthday present for mommy and daddy. Some have gotten tired of their siblings sneaking into their piggy bank.

First casualty

4/5 – The Guardian – Iceland prime minister resigns over Panama Papers revelations – Watch how fast things have developed.

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Initial follow-up to Panama Papers leakRead More »

Massive document leak on offshore banking. Intro to the Panama Papers.

1 Comment / Fraud, Other stuff / By Jim Ulvog

Old style money laundering. Image courtesy of DollarPhotoClub.com

A massive amount of whistle blower information was announced over the weekend. The files are from a large law firm in Panama that helped companies and individuals set up offshore companies. This is called the Panama Papers.

There are many legitimate reasons to use offshore companies. There are many illegitimate reasons too.

I’ve just started looking at the story. Here are a few introductory tidbits.

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Massive document leak on offshore banking. Intro to the Panama Papers.Read More »

Surprise! Enforcement efforts against money laundering have unintended consequences.

Leave a Comment / Other stuff, Pondering / By Jim Ulvog

Severe fines against large banks for violating anti-money laundering rules has led the banks to place a heavy focus on making sure their customers are legit. The result is a closing accounts of customers who have too high a risk of being shady. The unintended consequence is legitimate businesses and legitimate charities have difficulty finding a place to do their banking.

In a wonderful irony, articles at The Wall Street Journal on two successive days illustrate the tension. The articles leave you wondering in opposite directions. One article makes you think the banks ought to get serious about screening clients and shut down a bunch of accounts. The other article makes you wonder why these charities doing such wonderful work are getting all their accounts closed for no good reason.

First, charities finding themselves without bank accounts.

3/30 – Wall Street Journal – Cautious Banks Hinder Charity Financing / Account shutdowns and holdups of money transfers hinder ability to deliver aid to refugees – A charity that funds a school in Turkey which provides education to around 400 refugees from Syria had their account closed by JP Morgan for no stated reason. After an inquiry from the WSJ, the bank reversed their decision.

Another charity that operates a hospital in Syria had their accounts closed by BofA. After moving to Wells Fargo, their accounts were closed there. Staff at the hospital went four months without pay while the charity tried to figure how to get money into the country.

Authors have spoken to eight other charities who have had their accounts closed. Many others have had money transfers going into Syria, Turkey, or Lebanon held up for varying lengths of time.

Article mentions that banks are under pressure from the U.S. federal government to monitor their customers accounts and close those accounts which could be related to money laundering, whether related to drug running, terrorist financing, or other illegal activity.

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Surprise! Enforcement efforts against money laundering have unintended consequences.Read More »

Where did the money go from all those mortgage settlements? Mostly the government.

Leave a Comment / Other stuff / By Jim Ulvog

Yes, the majority of the cash from those multi-billion dollar settlements was kept by the federal government.

The Wall Street Journal wonders Big Banks Paid $110 Billion in Mortgage-Related Fines. Where Did the Money Go?

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Where did the money go from all those mortgage settlements? Mostly the government.Read More »

Update on LIBOR cases

Leave a Comment / Other stuff / By Jim Ulvog

Has been rather quiet lately on the Libor front, other than six traders have been acquitted after a mere one day of jury deliberations. A few updates:

2/12 – The Wall Street Journal – Last Wave on LIBOR: CFTC Likely to Charge Multiple Banks for Rate Rigging – Article cites sources saying the CFTC and British Financial Conduct Authority will be likely bringing civil charges in the next few months against Citigroup and HSBC. FCA has dropped an investigation of J.P. Morgan Chase but CFTC still has that investigation open.

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Update on LIBOR casesRead More »

More trouble for prosecutors actually getting a conviction against bankers

Leave a Comment / Accounting, Other stuff / By Jim Ulvog

Prosecutors in England failed in their efforts to convict six brokers of fixing Libor rates.

1/27 – Wall Street Journal – Six Ex-Brokers Acquitted of LIBOR Rigging in London – One key person was convicted at trial a while back and is now in prison. The six brokers just acquitted are the people he was supposedly conspiring with. Only the 6 weren’t conspiring with anyone about anything, according to the jury.

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More trouble for prosecutors actually getting a conviction against bankersRead More »

Barclays’ cost of dealing with fiascos is close to half of pre-settlement income over last 5 years

Leave a Comment / Other stuff / By Jim Ulvog

Previously discussed Barclays drawing a £72M (US$109M) fine for breaking British anti-money laundering laws and calculating the fine is equal to about six workdays worth of net income before costs of settlements.

While calculating magnitude of costs from this settlement, I noticed the income statement shows there have been huge reserves set up for settlements.

Fines and legal fees in last 4 years

The fines and legal fees over the last four years for all of the fiascos the bank has engaged in are a large portion of net income.

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Barclays’ cost of dealing with fiascos is close to half of pre-settlement income over last 5 yearsRead More »

Barclays’ money laundering fine in relation to their 2014 financial statements.

Leave a Comment / Other stuff / By Jim Ulvog

Previous post discussed Barclays drawing a £72M (US$109M) fine for breaking British anti-money laundering laws. The bold scheme involved not putting clients’ names into the computer system amongst other creative plans. They bankers involved also gave their clients a money back guarantee if their names ever became public.

I did a bit of research to find out how the fine compares to their financial statements. Was wondering how big a hit $109M really is for them.

You can find the 2014 financial statements for Barclays at this link. The financials are here. Income statement is on page 224.

Here are some key numbers to help put the £72M fine in perspective:

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Barclays’ money laundering fine in relation to their 2014 financial statements.Read More »

How’s this for a brazen money laundering scheme? We can add another item to the list of at least $16 billion of fines for money laundering.

1 Comment / Other stuff / By Jim Ulvog

Check out this plan for evading money laundering rules. Oh, it came with a money back guarantee to clients whose money was being laundered. Also, I’ve accumulated a preliminary list of industry-wide fines for getting caught busting those AML rules.

11/26 – CNN – Barclays fined $109 million for trying to hide “the deal of the century” – Staff at Barclays came up with a creative plan to hide clients’ money. The staff processed US$2.8B of deposits from “politically exposed people”, meaning people with significant political power and ability to do bad stuff to generate personal wealth.

Commission for the bank was £52M (US$77M).

According to the article, this scheme involved merely performing an Internet search to verify the source of funds as asserted by the clients, did not enter clients’ names on the internal computer systems which meant compliance staff would never find out who owned the money, and used quickly opened & closed offshore accounts to move the money.

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How’s this for a brazen money laundering scheme? We can add another item to the list of at least $16 billion of fines for money laundering.Read More »

Minor updates on bank fiascoes and settlements

Leave a Comment / Other stuff / By Jim Ulvog

A few articles on various bank fiascos: first private settlement for manipulating LIBOR, two rumored criminal investigations for selling MBS’s, and a billion dollar settlement for money laundering.

11/13 – Reuters – Barclays in $120 mln settlement of Libor case – lawyers – Barclays is first out of the gate settling private lawsuits in US for manipulating Libor. …

Minor updates on bank fiascoes and settlementsRead More »