As reforms sparked by FinCEN Files roll out a year on, key source is behind bars

The glob­al inves­ti­ga­tion on how tril­lions in dirty mon­ey flows through major banks has been wide­ly cred­it­ed for key anti-mon­ey laun­der­ing reforms cur­rent­ly being imple­ment­ed in the U.S

A year on from the FinCEN Files inves­ti­ga­tion, the United States Treasury unit at the heart of the glob­al exposé is now “work­ing over­time” to imple­ment major anti-mon­ey-laun­der­ing reforms, while the whistle­blow­er whose leaked doc­u­ments sparked the inves­ti­ga­tion lan­guish­es in prison.

The International Consortium of Investigative Journalists, BuzzFeed News and more than 100 media out­lets pub­lished the FinCEN Files in September 2020, uncov­er­ing more than $2 tril­lion worth of sus­pi­cious trans­ac­tions flow­ing through the glob­al finan­cial sys­tem, pass­ing through U.S.-based banks with rel­a­tive­ly few impediments.

In the weeks and months that fol­lowed, the United Kingdom’s Treasury Committee opened an inquiry into the “deeply trou­bling” find­ings of the FinCEN Files, and rev­e­la­tions from jour­nal­ists were referred to by anti-cor­rup­tion units in Liberia and the Seychelles. Eero Heinäluoma, a Finnish mem­ber of the European Parliament, called for greater bank­ing over­sight, say­ing that Europe’s exist­ing anti-mon­ey laun­der­ing sys­tem was like “a Swiss cheese, full of holes.” The European Union has since pro­posed a new finan­cial crimes watch­dog that would over­see trans­ac­tions across the bloc and help close loop­holes that have been exploit­ed by mon­ey launderers.

In the U.S., law­mak­ers seized the momen­tum offered by the inves­ti­ga­tion to push for­ward long-antic­i­pat­ed reforms to anti-mon­ey-laun­der­ing laws, lead­ing to the pass­ing of the land­mark Corporate Transparency Act in January this year.

At the core of the leg­is­la­tion is a new cor­po­rate reg­istry that will record the real own­ers behind all com­pa­nies reg­is­tered in the United States, effec­tive­ly end­ing the use of secre­tive shell com­pa­nies in the country.The Treasury’s Financial Crimes Enforcement Network faces a January 2022 dead­line for set­ting new rules that will estab­lish the reg­istry, and FinCEN and Treasury offi­cials are “work­ing over­time” to devel­op the new reg­u­la­tions, a spokesper­son for Sen. Sherrod Brown, the top rank­ing Democrat on the Senate Banking com­mit­tee, told BuzzFeed News. In a state­ment to ICIJ, FinCEN said it was “pur­su­ing numer­ous lines of effort relat­ed to ben­e­fi­cial ownership.”

“Timely and effec­tive [Anti-Money-Laundering] Act imple­men­ta­tion is a top pri­or­i­ty for FinCEN, and we are work­ing dili­gent­ly with our domes­tic and inter­na­tion­al indus­try part­ners and law enforce­ment and reg­u­la­to­ry stake­hold­ers to take con­crete steps to fur­ther the nation­al secu­ri­ty of the United States and pro­tect the U.S. finan­cial sys­tem and the American peo­ple,” the agency said.

The unit’s capac­i­ty to serve as the country’s finan­cial crimes watch­dog has been in the spot­light over the past year as well. FinCEN receives more than 2 mil­lion new sus­pi­cious activ­i­ty reports — which finan­cial insti­tu­tions are required to file to flag sus­pi­cious trans­ac­tions — each year.

Last March, top anti-mon­ey laun­der­ing experts said that FinCEN was under­fund­ed, over­stretched and lack­ing tech­nol­o­gy to keep pace with today’s finan­cial crime chal­lenges. They issued a report rec­om­mend­ing a fund­ing boost to revamp how the tiny agency oper­ates. The Biden admin­is­tra­tion request­ed $64 mil­lion of addi­tion­al fund­ing for FinCEN to aid in imple­ment­ing the ben­e­fi­cial own­er­ship reg­istry in its bud­get proposal.

While the FinCEN Files has been wide­ly laud­ed and cit­ed over the past year as a key dri­ver for glob­al mon­ey-laun­der­ing reform, the for­mer FinCEN offi­cial-turned-whistle­blow­er who orig­i­nal­ly pro­vid­ed the thou­sands of doc­u­ments at the core of the inves­ti­ga­tion report­ed to prison ear­li­er in September to serve six months for send­ing the con­fi­den­tial doc­u­ments to a BuzzFeed News reporter.

Natalie Mayflower Sours Edwards was first arrest­ed in 2018, more than two years before the FinCEN Files was pub­lished. After plead­ing guilty last year to send­ing high­ly secre­tive sus­pi­cious activ­i­ty reports from FinCEN to a reporter, she was final­ly sen­tenced in June this year.

“I’m absolute­ly proud of what I did,” Edwards told BuzzFeed News in an inter­viewbefore report­ing to a fed­er­al women’s prison in West Virginia ear­li­er this month. “My motive was account­abil­i­ty, and the American peo­ple had a right to know what was occur­ring with­in Treasury and that it was a nation­al secu­ri­ty issue and that American lives were in jeopardy.”

As FinCEN and the U.S. pre­pare for a new era of cor­po­rate trans­paren­cy, Edwards’ sen­tenc­ing was seen as a warn­ing to pre­vent poten­tial future whistle­blow­ers from going to the press. While the new leg­is­la­tion includes greater rewards for whistle­blow­ers bring­ing inside infor­ma­tion to the gov­ern­ment, the penal­ties for tak­ing that infor­ma­tion pub­lic through the media are more than twice as harsh as the penal­ties for fail­ing to dis­close a com­pa­ny in the first place.

“Instead of the gov­ern­ment doing their job,” Edwards told BuzzFeed News, “they decid­ed to come after a whistleblower.”

ICIJ.Org By Hamish Boland-Rudder and Sean McGoey