Three top Banks are now on a Government Financial Crime Board: Have Banks got too big to be held accountable?

The Government has announced a new task force to tackle money laundering and financially-based organized crime which will involve executives from Santander, Lloyds, and Barclays banks, despite a history of money laundering and tax evasion from all 3 banks.

The task force, known as the Economic Crime Strategic Board, which will consider where resources and finances allocated to tackling money laundering and other economically based crimes are needed.

The task force will be chaired jointly by the Secretary of State, Sajid Javid, and the Chancellor of the exchequer, Philip Hammond.

Sajid Javid announced the new task force with the aim to “take action on all fronts” to stop “the corrupt fraudsters” who are “living luxury lifestyles at the expense of law-abiding citizens”.

However, the decision to include senior bankers from 3 large, multi-national banks on a board that directs the funding of criminal investigations potentially involving assets of the organisations themselves appears on the surface to be an odd decision.

The ex-Chief Executive of Barclays, John Varley, is currently standing trial at the Old Bailey in London and is facing an 11-year prison sentence for his role in the 2008 financial crisis, and is being charged of bribing authorities in Qatar to induce investments from companies in the Middle-Eastern state to avoid being part of the British Government’s bailout in the 2008 crash, which would have decreased stocks in the organisation.

This followed a case that authorities weighed against Barclays bank itself as an entity for the illegal fundraising which was thrown out last year before charges against the bosses themselves were instated.

Various holding of Santander in Europe have also been investigated in the past few years for it’s involvement in supplying its clients with the means to evade taxes through off-shore companies based in tax-havens in Latin America, known as the Paradise Papers.

A leak by IT worker Herve Falciani in 2008, which disclosed the names of 130,000 swiss bank account holders who were suspected of evading taxes, found that the Chief executive of Santander at the time Emilio Botin, and several members of his family, were of the 659 names believed to have been disclosed in the leak and given to Spanish authorities. The case was eventually dropped by the Spanish tax agency following a 200-million-euro settlement.

The Financial Times in 2017 also found that Lloyds Bank may have been aware of money laundering at the Reading Branch of the organisation, after it was found that the Branch had committed fraud totalling around £1 billion.

The fraud saw the Reading Branch working with a corrupt ‘turnaround consultant’ that would take funds from small businesses and launder it over the course of 8 years, and the branch would then follow customers to collect on debts the businesses were unable to pay, leading to evictions from homes and the loss of entire life-savings.

It was found that despite publicly denouncing that any criminality was taking place as the branch before 6 former workers were found guilty of fraud in February 2017, a report prepared in 2007 that investigated claims of criminal misconduct in the Reading Branch personally exonerated a now convicted Lloyds bank worker out of a “lack of evidence”. However, the report itself doesn’t support this conclusion, and Lloyds investigators did find that an administration fee totalling over £150,000 was diverted to an account with the Bank of Scotland and then to an offshore account, and not directly to an account belonging to Lloyds Bank, indicating that money laundering was a clear possibility.

While most Banks already cooperate with financial authorities in money-laundering issues, and the taskforce is primarily set up to focus on low-level and extranational money-laundering schemes from countries such as Russia and Nigeria, the ability for senior executives of banks to have direct input into the financing, and by extension, the investigation of financial crimes by the government could mark a dangerous precedent whereby Banks are increasingly being placed ‘above the law’ when it comes to money laundering, creating an attitude that Banks are getting ‘too big’ to be effectively controlled by the UK state, one of the major contributing factors to the 2008 financial crash.

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