[Plura-list] Fincen (they knew all along); California's fire-debt

Cory Doctorow doctorow at craphound.com
Mon Sep 21 10:28:28 EDT 2020

Today's links

* Fincen (they fucking knew all along): $2t in unpunished money
laundering, leaked from the US Treasury's Financial Crimes Enforcement

* California's fire-debt: A century of mismanagement and PG&E;'s
criminal neglect meets the climate emergency.

* Colophon: Recent publications, upcoming appearances, current writing
projects, current reading


🌚 Fincen (they fucking knew all along)

The Fincen leaks are the latest finance corruption megaleak, following
Paradise Papers (2017), PanamaP apers (2016), Swiss Leaks (2015), Lux
Leaks (2014). It's a trove of 2100 "Suspicious Activity Reports" (SARs)
from the US Treasury's Financial Crimes Enforcement Network.

The reporting on the leaks was shared among multiple journalism orgs,
including BBC Panorama, Buzzfeed, and more than 100 other orgs in 88
countries, coordinated by the International Consortium of Investigative
Journalists, whose master report is a key to the whole leak:


Here's the nut: the world's largest banks knowingly laundered billions
of dollars for the worst criminals, looters and oligarchs in the world.
The financial regulators knew they were doing it.

Many had paid billions in fines and avoided criminal prosecutions for
earlier misdeeds and continued to facilitate the flows of vast, illicit
fortunes on behalf of brutal criminals and dictators, including many who
were under sanction.

The US government knew. The banks knew. Neither acted to stop it. The
banks made a fortune for their trouble. I mean, we could just end it
there, but the details matter.

Start with the largest bank in the US: Jpmorganchase. Jpmorgan knowingly
laundered money for looters from Venezuela and Ukraine and helped
launder the billions stolen from Malaysia through the 1MDB scam - $1B of
that money passed through JPM's fingers, and they knew it was dirty.

They also laundered millions for Paul Manafort - *after* he'd been
forced to resign over money-laundering accusations. The volume of
criminal money flowing through JPM INCREASED every year, even as it paid
fines in 2011, 2013 and 2014 for money laundering.

JPM told the ICIJ that it plays a "leadership role" in "proactive
intelligence-led investigations" and developing "innovative techniques
to help combat financial crime."

(ok looter)

Other banks engaged in criminal money-laundering: HSBC, Standard
Chartered, Deutsche Bank and Bank of NY Mellon.

The leaks only represent 0.02% of SARS, and document $2 *trillion* in
dirty transactions between 1999-2017, with $1.3 *trillion* at
Deutschebank alone.

Treasury stonewalled ICIJ, but announced that it was seeking public
comment "on ways to improve the US's anti-money laundering system."

The reporting not only encompasses the leaked SARs: the media orgs on
the job analyzed 17,600 other docs: leaks, court files, FOIA docs, and
interviews with experts.

Here's what the banks did: "blindly moving cash through accounts for
people they can’t identify, failing to report transactions with all the
hallmarks of money laundering until years after the fact, doing business
with clients enmeshed in frauds and corruption scandals."

This activity took place while banks like HSBC were *already on
probation* for other money-laundering crimes. HSBC says it is now "a
much safer institution."

Much of the $2T flowed through secrecy jurisdictions - not just the BVI,
but also the City of London, Wyoming/Nevada/Delaware, Cyprus, HK, the
UAE, Switzerland and Russia - places where companies can have anonymous
owners and beneficiaries.

ICIJ traces some of this cash to terrorist orgs, sanctioned individuals
in Iran and the former USSR, etc.

JPM laundered more than $1b for a mysterious company called ABSI
Enterprises, believed to be a front for Russian mafia boss-of-bosses
Semion Mogilevich.

*More than $1b*!

The Treasury deputizes banks themselves to fight laundering, giving the
largest banks responsibility to catch criminals. Instead, these banks
used their privileged position to exact fees from crooks in exchange for
keeping schtum!

Meanwhile, the *actual* compliance officers at the big banks are
marginalized and underfunded: "overworked, under-resourced staffers, who
typically work in back offices far from headquarters and have little
clout within their organizations."

"Documents in the FinCEN Files show compliance workers at major banks
often resort to basic Google searches to try to learn who’s behind
transfers involving hundreds of millions of dollars."

Which means that banks can only figure out if they're laundering money
for a monster if that person is already in the news - and usually, that
happens *after* the money has winged its way to some other far-off

Meanwhile, the money people *at the bank* go to great lengths to keep
their own compliance people from busting them, like Standard Chartered,
where bankers used aliases so payment from sanctioned criminals could go

Some of the dodges used to disguise the true owners of money laundries
are hilariously amateurish, and the only thing worse is how long they
were overlooked by the regulators who were supposed to be preventing them.

For example, the UK's Companies House - the corporate regulator -
allowed a couple of anonymous companies in the British Virgin Islands to
be listed as the owners of *hundreds* of UK companies, all housed in a
vacant former nail bar in Wales.

One of these companies, Novirex, funneled gigantic sums via obviously
fraudulent payments, such as $400k for "knee boots" from Hong Kong,
millions in all, while booking $2500/yr in revues, with the help of

JPM had a financial partnership with the Latvian bank ABLV, a laundry
for Russian criminals, whose own compliance department rated *90
percent& of its customers as "high risk." They moved billions, with the
help of JPM.

This was on Jamie Dimon's watch, when the division that did these dirty
deals ballooned to $4.13b/year. Novirex was the laundry that Paul
Manfort used to do his own financial crimes. JPM laundered at least
$230m for them.

Then there's HSBC, long one of the world's most unapologetic criminal
banks. The leaks reveal HSBC's before/during/after the fact involvement
in the World Capital Market Ponzi scheme, which bilked poor people from
the world's poorest places out of $80m.

While WCM was under investigation in *three* countries, while HSBC was
*still on probation* for laundering money for the mass-murdering Mexican
narco cartels, it kept WCM's account active and allowed $7m to be
emptied out of it.

Just part of $900m in shell-company-linked anonymous transactions HSBC
cleared for the world's crime-lords and dictators.

Indeed, all 5 of the worst culprits in the leaks had taken "deferred
prosecution deals" - probation for earlier crimes, which they continued
to commit.

Like Bank of NY Mellon, which laundered $1.3b for Putin ally and mafioso
Oleg Deripaska. Or Deutsche Bank, which moved $11b for Deripaska.

And all five banks laundered money for Ukrainian oligarch/wanted
criminal Dmytro Firtash - while telling Treasury that they were cracking
down on financial crime. JPM laundered $2b for Firtash.

The leaks reveal what we've known all along: a fine is a price. The
banks were fined billions. They made hundreds of billions, and laundered
trillions. Fine 'em billions more, and they'll just absorb it as the
cost of doing business.

The stiffest penalty ever paid by a bank - $8.9b to France's BNP
Paribas, a criminal conviction, 13 staffers forced out - resulted in its
share price going UP, because the deal allowed to to resume US dollar
trading after one year.

Deutsche Bank paid $258m in fines for violating sanctions, announced it
had cleaned house, and (the leaks reveal) *one month later* started
plans to launder money for Ukrainian oligarch Ihor Kolomoisky - $240m in

Deutsche Bank now says it had "past weaknesses," has "learnt from our
mistakes" "systematically tackled" the issues and "we're a different
bank now."

Who the fuck believes this bullshit?

The US Treasury's financial crimes enforcers, for one.

These companies shouldn't get deferred convictions. The individuals who
perpetrated these crimes, and the executives who signed off on them,
should face criminal persecution.

They should forfeit all their assets. The banks should be broken up -
and broken up again, and again and again - until they are small enough
that no one can claim the organization was too big to effectively police.

This is not the first, or second, or third, or fourth set of finance
leaks that reveals that the "finance industry" is a literal,
non-metaphorical, non-hyperbolic global crime syndicate.

But it is the first set of leaks that details just how well that fact is
understood by government financial regulators, and exactly how
unbelievably bad they are at their jobs.

I say "unbelievable" because only an idiot would believe that anyone is
this bad at their job. "Once is happenstance. Twice is coincidence. The
third time it's enemy action." This isn't incompetence.

It's complicity.


🌚 California's fire-debt

In MIT Tech Review, James Temple lays out the science behind
California's fire-debt, a century of zero-tolerance mismanagement,
exacerbated by climate crisis's torrential rains and ferocious heat,
which drive massive plant growth and die-off: a tinderbox.


It's an important addition to Pro Publica's late August story on the
wildfires - the fact that they are foreseeable and preventable, and that
controlled burns, while expensive, are FAR cheaper than wildfires.


Early 20th Century megafires kicked off an official policy of ending all
forest fires, with the result that 100 years' worth of flammable
material has backlogged in the region's forests.

The climate crisis made forests more flammable with extreme
growth-and-death cycles driven by rains and heat, waiting to be set off
by climate-change-driven lightning storms and PG&E;'s absolute
malfeasance in maintaining its infrastructure.


Five of the ten worst fires in California history are *burning right now*.

*20 million acres* of California need "fuel reduction" - 2/3 of the
state's forests, six times more than has burned this year.

Fuel reduction can be managed burns or thinning with chainsaws.

It's expensive: burning is $200/acre; thinning can be $1K/acre. Clearing
1.1m acres/year (which we'd have to do for a decade to clear the debt)
will cost more than $1b/year.

If you think that's expensive, consider the costs of wildfires:
$800/acre just to fight them, and the damage can easily run to the
billions - the month-long 2017 Wine Country fires cost $9b.

Clearouts are a no-brainer and infinitely cheaper - and safer, and less
traumatic - than letting wildfires rage, but California is still
heel-dragging, with the landmark $1b allocated over 5 years representing
only 20% of what's needed.

The US Forest Service and Gov Newsom have inked a toothless Memoradum of
Understanding that will augment this, but it includes *no* funding.

Meanwhile, we must revise our building codes to include more setback
from forests, better materials, more evac routes.

And to really make a difference, we have to slow climate change. Of
course. These fires will get a *lot* worse if we don't do that.


🌚 Colophon

Today's top sources:

Currently writing: My next novel, "The Lost Cause," a post-GND novel
about truth and reconciliation. Friday's progress: 670 words (63295 total).

Currently reading: Gideon the Ninth, Tamsyn Muir

Latest podcast: IP https://craphound.com/podcast/2020/09/14/ip/

Upcoming appearances:

* Keynote for Law Via the Internet conference, Sept 22,

* DWeb Meetup — If Big Tech Is Toxic, How Do We Build Something Better?
Sept 22,

* Writing into an Uncertain Future, Afterwords Festival, Oct 1,

Latest book:

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet
analyzing the true harms of surveillance capitalism and proposing a

* "Little Brother/Homeland": A reissue omnibus edition with a new
introduction by Edward Snowden:
https://us.macmillan.com/books/9781250774583; personalized/signed copies

* "Poesy the Monster Slayer" a picture book about monsters, bedtime,
gender, and kicking ass. Order here:
https://us.macmillan.com/books/9781626723627. Get a personalized, signed
copy here:

Upcoming books:

* "Attack Surface": The third Little Brother book, Oct 20, 2020.

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*When life gives you SARS, you make sarsaparilla* -Joey "Accordion Guy"

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