Shares in Barclays (BARC) and HSBC (HSBA) dropped sharply after leaked documents reportedly alleged that they and other European banks moved large sums of potentially illicit funds over a period of more than two decades.

According to what are known as suspicious activity reports filed with the US Treasury Department’s Financial Crimes Enforcement Network (FinCen), the reports allege major banks are still funneling dirty money despite billions of pounds in fines for their past involvement in this area.

Barclays’ shares fell 5% to a three-month low of 91.2p while shares in HSBC fell 6.6% to 290p, their lowest level since 1995. HSBC shares have more than halved this year.

In Europe, shares in big banks ABN Amro, BBVA, Deutsche Bank and Societe Generale fell 5% while insurer ING lost 8%.

Over 2,000 suspicious activity reports, containing information on over $2 trillion of transactions between 1999 and 2017, were obtained by BuzzFeed News and have been shared with various media organisations.

The suspicious activity reports are not themselves proof of wrongdoing, but imply that the banks routinely move funds for companies in offshore banking havens without knowing the ultimate owners of the accounts.

In some cases the banks moved funds even after US officials warned them they were liable to prosecution if they kept doing business with proscribed individuals or regimes.

HSBC reportedly said the information was ‘historical’ while Barclays reportedly said it had complied with ‘all its legal and regulatory obligations including in relation to US sanctions’.

European banks have paid billions of pounds in fines in recent years for violating sanctions relating to countries like Iran and for breaking anti-money laundering rules.

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Issue Date: 21 Sep 2020