Finance Minister Fights European Union Over Money Laundering Blacklist

Ghana's Minister for Finance, Ken Ofori-Atta and EU Ambassador Ghana's Minister for Finance, Ken Ofori-Atta and EU Ambassador

Ghana's Minister for Finance, has boldly taken on the European Union (EU) and read hypocrisy in its decision for blacklisting Ghana and other countries over money laundering and anti-terrorism issues, which has gotten some banks in Europe, not to have any business dealings with Ghanaian institutions; both public and private.

On Thursday, October 1, 2020, Ken Ofori-Atta at a meeting with the EU ambassador to Ghana, Diana Acconcia, cited the recent international media reports revealing the criminal activities, including dirty money laundering by HSBC Bank, a top European Bank, and felt the EU had been unfair to Ghana and the other countries.

Already, Ghana's embassy in the Belgium, has been hit with an order from the authorities of ING Bank in Brussels, to withdraw all its money, so that the bank will proceed to close the embassy's accounts. No reason was given by the bank, but it says the decision is irreversible. The embassy has up to November 12, 2020, to withdraw all its money to another bank.

But Ghana's Foreign Minister, Shirley Ayorkor Botchwey, insists that it is as a result of the West African nation being blacklisted by the EU for non-compliance with money laundering and terrorism financing regulations.

Last month, a 16-month investigation by the International Consortium of Investigative Journalists, Buzz Feed News and 108 other media partners, has found that HSBC continued to provide banking services to alleged criminals, Ponzi schemers, shell companies tied to looted government funds and financial go-betweens for drug traffickers.

In March 2014, HSBC, was cited for profiting from an international criminal scheme even while on probation for having served murderous drug cartels and other criminals.

HSBC had admitted to U.S. prosecutors in 2012 that it had helped dirty money flow through its branches around the world, including at least $881 million controlled by the notorious Sinaloa cartel and other Mexican drug gangs.

The Finance Minister, who had virtually been drawn to tears before the EU ambassador, over the decision by the European Union to add Ghana to the "blacklisted countries for non-compliance with money laundering rules" said the decision is like "a sledgehammer thrown at us".

He made these remarks when he met the European Union Ambassador at a ceremony to sign an agreement for some 87 million Euros budgetary support labelled as a "Coronavirus response".

Mr Ofori-Atta, said: "As you know, the EU put us on the grey end of the blacklist because of our discussions with the Financial Action Task Force (FATF). That's quite debilitating and so we are hopeful to be off the list in December and that the EU will also expeditiously take us out of that."

He continued: "It sometimes looked quite incongruent. When we see issues such as HSBC Bank right at your door and then we feel like a sledgehammer is being thrown at us for an event that has not occurred, but in preparedness, we are moving aggressively to get that and we'll seek your support when we get off the FAFT list, that the EU reciprocates quickly."

Ghana has been placed on a list of countries under the watch of the EU for certain money-laundering activities due to an observation by the FATF, the Inter-government organization recognized by the World Bank and IMF for instituting policies aimed at combating money-laundering and terrorism.

The EU on May 7, 2020, proposed to the European Parliament to include Ghana among 11 other countries on the money-laundering blacklisted countries, thus putting financial transactions under greater scrutiny.

The 12 countries which were subsequently banned effective this October are Ghana, Botswana, Mauritius, Zimbabwe, Bahamas, Barbados, Jamaica, Nicaragua, Panama, Cambodia, Mongolia and Myanmar.

But Ghana's Ministry of Finance in a statement responded that the EU's move does not reflect exactly the current status of Ghana's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) (AML/CFT) regimes.

"This is unfortunate, and the Government of Ghana is always ready to engage with the EC [European Commission] about the true status of the country's AML/CFT regime and efforts being made to strengthen same," the statement read.

The financing agreement donates 87 million euro to budget support, to assist the country in its response to the COVID-19 crisis.

"This action shows the European Union's continued commitment to our partnership with Ghana, especially during these challenging times", said Diana Acconcia, EU Ambassador to Ghana, at the signing ceremony with the Minister for Finance, Ken Ofori-Atta and representatives of the EU Member States.

In the case of HSBC, prosecutors in a controversial decision, declined to seek an indictment of the bank but instead allowed it to pay a $1.92 billion settlement and serve five years of probation during which its efforts to prevent money laundering would be monitored by a court-appointed watchdog. The court named a former top New York state financial crimes prosecutor, Michael Cherkasky.

The FinCEN Files investigation found that HSBC's highly profitable branch in Hong Kong played a key role in keeping the dirty money flowing. Although providing only a partial view of HSBC's suspicious activity reports, the records show that between 2013 and 2017, HSBC's U.S. compliance staff, who are charged with monitoring customer activity, filed reports lacking crucial customer information on 16 shell companies that had processed nearly $1.5 billion in more than 6,800 transactions through the bank's Hong Kong operations alone. More than $900 million of that total involved shell companies linked to alleged criminal networks, according to an analysis by ICIJ and its media partners.

In a statement, HSBC defended changes the bank made under the monitorship. "Starting in 2012, HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime," said Heidi Ashley, a spokesperson for the bank. "HSBC is a much safer institution than it was in 2012."

The bank told ICIJ that it increased its compliance staff from a few hundred members in 2012 to several thousand in 2017 and invested more than $1 billion in compliance initiatives since 2015. "Though we have made significant improvements in our financial crime compliance programme, we are continually seeking ways to improve," the bank said in a statement.

The investigation is based on a review of dozens of leaked suspicious activity reports, or SARs, as well as interviews with more than a dozen former HSBC anti-money-laundering employees. Banks doing business in the United States submit the confidential reports to an intelligence office within the U.S. Treasury Department known as the Financial Crimes Enforcement Network, or FinCEN. Suspicious activity reports reflect concerns of watchdogs within banks and are not necessarily evidence of any criminal conduct or wrongdoing.

Leaked records show HSBC processed at least $31 million between 2014 and 2015 for companies later revealed to have moved stolen government funds from Brazil; and more than $292 million between 2010 and 2016 for a Panama-based organization branded by U.S. authorities as a major money launderer for drug cartels. The organization, Vida Panama, denies wrongdoing and is fighting the U.S. designation. The records show HSBC worked with a bank in Tiraspol, within Moldova's breakaway territory of Transnistria, for four years after the U.S. Treasury Department issued a 2011 advisory warning of the risks of doing business with the Tiraspol bank.

In interviews with ICIJ and BuzzFeed News, more than a dozen former HSBC compliance officers expressed deep concerns about the bank's anti-money-laundering program, even during its probationary period. Compliance officers said that the bank did not give them enough time to meaningfully investigate suspicious transactions and that branches outside the U.S. often ignored requests for crucial customer information. They said they were treated as a second-class workforce within the bank, with little power to shut down problematic accounts.

The FinCEN Files raise new questions about the U.S. Justice Department's decision in 2012 to forgo indicting HSBC or any bank executives in the Sinaloa cartel case. The decision was opposed by rank-and-file prosecutors, who had prepared a list of up to 175 criminal charges against the bank that the government ultimately shelved. No one went to prison over the bank's historic wrongdoing. The findings also raise questions about the department's decision, five years later, to pronounce HSBC reformed and allow its probation to lapse. The investigation builds upon ICIJ's previous Swiss Leaks project, which exposed how HSBC's Swiss private banking arm profited from doing business with tax dodgers and criminals around the world prior to 2008.

FinCEN Files documents show that HSBC knew regulators were investigating its customer, the WCM Ponzi scheme, even as it helped move its money.A federal class-action lawsuit brought by bilked investors alleged that HSBC Hong Kong was "instrumental in helping WCM777 to continue its Ponzi scheme." A federal judge dismissed the suit last month, ruling it had been brought in an improper jurisdiction.

In an exclusive interview with ICIJ, the Ponzi scheme's bow-tie-sporting founder, Ming Xu, said HSBC did not contact him to ask about massive money flows WCM was moving through the bank's Hong Kong accounts.

Banks' SARs form the backbone of U.S. authorities' attempts to fight money laundering, but the system fails to stop deluges of dirty money. Banks can, but are not necessarily required to, block or close accounts suspected of being used for money laundering, and they can fulfill a key legal obligation by simply reporting the transactions to FinCEN. The office received more than two million of those reports last year, more than its agents could hope to read.

ICIJ analyzed nearly $1.5 billion in transactions that flowed through shell companies holding commercial accounts with HSBC Hong Kong between 2011 and 2016. In each case, HSBC filed SARs that failed to include fundamental facts about the bank's own big-dollar customers, including who owned the accounts, what countries the owners lived in, and where the money came from.