a plot connected to the highest levels of government why do journalists. have to die. 3. years later the reasons are still unclear. the case. starts to emerge through. w. . the road to corruption is paved with good intentions or so it would seem after this week's revelation that after years of claiming they're getting their houses in order renowned banks continue to aid and abet illegal money laundering an international consortium of investigative journalists is behind the massive leak of documents from the u.s. financial crimes enforcement network or finance and for short documents that are

studded with prominent names from united states president donald trump on one side of the atlantic to germany's deutsche of bunk on the other it seems to have complied with rules to report suspicious transactions but took few steps to rein them in our topic money laundering all guards terrorists how corrupt are the banks. welcome to to the point it's a pleasure to introduce our guests daniel drucker is editor in chief of buzz feed news germany and he says the suspicious activity records give banks a free pass to keep moving dirty money then collect the fees. and it's

a pleasure to welcome our few carnatic to the program he's chief europe correspondent for politico and he believes this councils are just the latest indication that germany's banking sector is neither financially nor culturally sound. and great to have with us as well then to lena fun period oh she works for the british economist and she thinks justice do much of it was finally starting to recover the revelations related to its involvement in money laundering in the finance and files are a huge setback. so let me begin by asking about the back story on these revelations buzz feed news in fact was one of the media institutions that was involved in proofreading and essentially researching the document so can you give us a short version of exactly what's going on here sure both the news and the u.s. or u.s. investigative team i'm sure that these with the i.c.j.

the international consortium of investigative journalists and they got in all these different i mean joins us from all over the world like that it was put in the papers part of the papers all these other big leaks over the last few years and then about 400 people went to work and which research them. looked into them and got stories ready for about a year and so we published last sunday and the original source of the documents whistleblower doesn't comment on that i'm sorry ok matthew carney cheek in the era of alternative facts as they are sometimes called can we be sure that these reg revelations are truly accurate and that the implications are as grave as they say you. well to be honest i don't agree can be sure in tow it goes to the courts and told prosecutors look at it and you know file indictments and so forth and you know this is one of one of the problems of this environment that

we're in there are all kinds of data leaks like this we've seen them over the years and journalistically it's very exciting but we often don't really know even the people who are reporting it what the motivations of or the people who are leaking it who's really you know but behind this kind of thing but they have brought to light a lot of malign behavior it has to be said and this looks like another such case eventually different many viewers i think will be inclined to say this hardly comes as a surprise look at the billionaire towers in new york look at the mansions in london we always thought they're being financed by ill gotten gains why should they care about yet another revelation that the rich don't play by the same rules as the rest of us it doesn't come as a huge surprise to you all right but 1st of all is to extend the sums involved you know 2 trillion dollars stuff starts you know i think most of us can't even imagine

how much money that is and then i think we all have to be aware that this is not something completely abstract this is money that does not it's not used to kindergartens or road so schools i mean ordinary people suffer because this type of money laundering is happening so it's not something that's only concerns only gods or drug as it concerns all of us. don't record the institutions that we are seeing implicated here are some pretty illustrious names j.p. morgan h.s.b.c. deutsche bank just to name a few why them is there something particular about these banks are they simply the tip of a much bigger iceberg so the. lot of banks like these obviously the biggest ones i think why they are so big and over the everyone like looking into them as they move the most money they can they are the big man the banks that have the access to the

u.s. dollar to the financial market in the u.s. and lots of people who launder money you'll have like my they want to like invest inject into the real economy want to do that in the dollar market in the u.s. so they they use like smaller banks like afghan united to me a bank or some cyprus bank and then try to find a relationship with a big bank and then move the money to germany to the u.s. and so on and matthew what kind of clients are we talking about here who is it laundering their money with these banks well it seems that most of the people would be people we've never heard of they're not generally in the public view some of them all are but these are the people really in the background who are often pulling the strings who have their hands in various pots and know how to work the system especially in a lot of these you know energy rich countries and places like that and they need to find a way to move their ill gotten gains out of the countries where they're operating

and this network of banks is daniel says provides them you know a ready opportunity to do so i want to just bring in a short report that we have and i think one question many of us perhaps never actually posed but have you ever thought about why is it called money laundering the fact is the term dates back to the u.s. gangster al capone to legalize his illicitly acquired against he purchased a bunch of laundromats now today's criminals oligarchy and terror groups are working at a distinctly larger scale. laundering doesn't only happen to clothes but to money as well it is estimated that between $800000000000.00 and $2.00 trillion u.s. dollars are laundered around the globe each year. current research reveals how the system works using so-called mirror trades billions of dollars from illegal income

such as drug trafficking and prostitution are pushed back and forth between different banks and the us mail to this money is then put into legal investments real estate is especially popular because it can be paid for in cash in many countries such as the u.s. . the purified proceeds then flow into shell corporations in tax havens such as the cayman islands. the international fight against money laundering is often inadequate because national money laundering authours are not as well networked as the criminals ones it's so difficult for lawmakers to put an end to money laundering. let me pass that question straight to you and i mentioned in fact policymakers are good intentions at the outset of the show after revelations like the panama papers the luanda the leaks and so when there's been

a lot of talk and also some action on cracking down yet policymakers don't seem to get the problem under control why they don't the problem is that for a bank that's a conflict of interest because needs to maximize of profits needs to make money these this type of business if. it's often quite hard to take because obviously the money will go to great lengths to obfuscate that money so there is a great temptation not to look too closely and to accept clients bank should not have accepted and should have known in the 1st place except because maybe nobody will notice. so dripper banks are required to file these suspicious activity reports that you mentioned in your opening statement you say that they amount to a free pass for the banks to keep on making money by laundering dirty money but isn't this filing of these reports a 1st step toward compliance yeah i think it's important that these reports get

fired the problem is i think twofold one is banks into making money they must make money because of this issue for some reason and then with the most mint and so it's really every time they see something we had in their accounts they seize on some shady money they have to decide do we want to let me less money and drop the client or should we just filed a report and then let's see if the authorities do something with it and we just continue our relationship with the client and this is what like happens all the time in defense and file is that like a bank fight it's a report it's for like for normal person looking at the scene 3 to clear the should not be money being moved through doj a bank will commence upon whatever but they continue the relationship and then they say we did this report and as long as there or thought is they'll do anything we are fine with like working with these clients and i think that's a problem because the authorities and we might speak about the status was

definitely not well equipped enough to like these illicit money flows like him i think let's come back to that in just a moment but matthew let me bring you in also in response to what we just heard from findlay because your opening statement said that this is a problem of the defective corporate culture at places like deutsch a bug but aren't we in a way putting banks in a contradictory position their business model is as they believe is said to make money and yet we're also in a sense expecting them to be self and forcers well i think we've made it to u.c. for them to be honest i mean the fact that all they have to do is to check the box and say well we filed this report you know that's that's the end of the story we don't. the worry about it anymore i think gives them an alibi where the onus should really be on them to do more to determine whether these transactions are sound or not and you know the fact is that the regulators should be much more involved here then they have been and they've really dropped the ball the policy

makers by not making life more difficult for the banks by not requiring them to have stricter guidelines in terms of reporting this activity and the regulators for not acting on it more effectively so eventually i asked you before why normal citizens should care policymakers you would think would have very good reason to care and to do a lot more because just one fascinating statistic i recently encountered the amount of money that has left africa through illicit financial transactions meaning corruption parking money in tech savings and so on more than equals what africa has received in development aid over the past 50 years so it seems like governments both donor governments and also african governments themselves would have ample incentive to crackdown more effectively absolutely i mean the figure you cite is heartbreaking if you think about it you know what good could have been done with

the money that left the country. absolutely and policymakers to have survived and should should do more but these things happen so slowly i mean if you look at germany now the wia cuts surely must of shown that often it's not really very good at its job should have done a better than being the germans or i mean actual supervision or a supervisory authority german regulator and if not why it caught them this latest revelation should be a reason to give often more teeth to reform the way they do they do their work to maybe employ more people. to police these things would have happened yes hopefully yes but as you know these things even with the. stuff and pensions move slowly fall a problem off such a scope i do want to come back to the german picture in a moment but let's perhaps stay with the international one 1st of all intended repr the customers on these mira trades that were mentioned in our report they include

terrorist groups they include drug cartels the united states government spends billions fighting those 2 entities drug cartels and terrorist groups and yet the journalist's consortium behind the fence and leaps include leaks including buzz feed said that the u.s. is the machine room room of money laundering so what's behind that paradox. like we said before i think the main thing is that it's it's really there is has to be a lot of effort put into finding all of like how to stop this like like the fins and like the authority that like this these guys on named after they have $270.00 employees but they get $2000000.00 reports every year i think it's a year every month i don't know but it's like it's millions of reports every year and they have $270.00 people to check on them like how are they able to go go off to everyone everything and everyone so i think that's like the main thing is it's

a huge system like billions of like i think it's 5 billions of money every day laundered all over the world. it's very complicated these people go to to do to great lengths to hide their. methods and then you have like like a couple of dozen people wondering them down and that's like definitely not going to work and i think you know other issues just on that quickly is that if something is happening outside of the united states the united states government is going to be less interested in it it doesn't mean that it's not going to be interested in the illegal activity but if people are laundering money in you know congo. that's not going to be high on the united states government's list and i think that they also have this problem that they have a very large financial services sector which is a very lucrative business in the united states the biggest banks in the world are all american banks and they make a lot of money by shifting money around the world i think you know it has to be

said there are plenty of legitimate reasons to be transferring money in these. around the world for companies and governments and so forth so it's very difficult to keep track of it all but i don't think that they have a real you know baked in incentive to go after what's you know happening in the 3rd world so let's talk about europe's incentive because in fact that european commission has had quite a bit to say on money laundering in the last few years claims to want to do a great deal more to crack down and yet the world's tax havens including to some leading european centers like the netherlands switzerland ireland aleck's and borg play a huge role in the machinery of the money laundering system so clearly this is an area where we need a true european approach also a global approach but how likely are we to get that at a time where in essence we're seeing d. globalization and a retreat from multilateralism well in europe it's also worth remembering that john

klobuchar who was president of the european commission was also the finance minister and prime minister of luxembourg for 20 years and oversaw many of these activities up until 2014 when he became the president of the european commission and that didn't halt his rise i think that there have been some reforms in europe there are tougher controls on a lot of the tax havens for example but the core issue here is that the people who are doing this are always one step ahead they will always find a new way to undermine the system or at least that's been the history of it and the people who are policing it are often civil servants who do not. have the resources they often don't have the vision to go after these things and it's only until these types of stories come to light that people take a 2nd look at it and say well we need to get that under control and unfortunately the pattern has been you get this problem under control and then they find another way to do exactly the same thing so i think this is this is the dynamic that needs

to you know change the debate in germany currently holds the rotating presidency of the financial action task force which is in fact one of the leading multilateral institutions trying to get this problem under control but some critics say that germany itself is too lax when it comes to illicit transactions is that right. yes i think unfortunately this latest findings of phosphate and others have proven that germany is too lax i mean deutsche bank place a very prominent role in in money laundering according to these i think off the 2 trillion $1.01 about half west somehow gone through dacha bank at some point i mean so it was one of the biggest players in this and it's germany's biggest bank germany's old one of germany's oldest and biggest banks so surely that shows that germany has been too lax let's dive deeper in the role of a bank that in fact once was the titan of germany's financial sector. has

been the topic of prior reports of dubious dealings. from the flagship of german business to a scandal group deutsche bank rather than success stories dark businesses keep coming to light one of the biggest scandals banks role in the 2007 financial crisis the u.s. judicial rehan to the company a fine of more than $7000000000.00 for dubious mortgage transactions it accused the bank of having contributed to the real estate crisis. in 2013 the e.u. commission imposed a fine of 1700000000 euros on 6 major banks for manipulating important reference interest rates such as euro board and leave. bond was one of them. the russian affair came to light in 2015 bank customers are said to have laundered

around $10000000000.00 of illegal earnings in russian rubles through the financial centers of moscow new york and london. the. us president donald trump has also been a special client of deutsche bank for more than 20 years with his real estate financed by the bank he also did business with kremlin associated russian oligarchs . corrupt is dortch about. past that question straight on do you clearly dodge about its business model has involved a lot of smoke and mirrors your opening statement said the bank was just beginning to recover really. day that's a good time at the beginning of the price did actually rise which hasn't happened in the minutes seemed that fine was stabilizing but then of course $2.00 things happened one was the crisis which which hit the fan quite badly and now this

thing the 5th revelation so it doesn't really have a stabilizing anytime soon so matthew recover. in share price is one part of the issue but of course to recover is also a question of whether they can recover internally from what you described as a very problematic corporate culture where is that coming from well it just comes from the history of the bay quite frankly i mean this is nothing new there have been you know books written about the corruption at deutsche bank. and it continues you know if you a few years ago i reported on a story where you had the senior people in the bank ordering spying on a on a shareholder who was there was a gadfly shareholder who was making trouble and they hired a security firm to go and spy on him and his vacation home in spain and even rented the house i mean these are extraordinary measures that they've gone to over the

years and there's just one thing after another if you look at any major financial scandal in germany over the past 50 years you can bet that deutsche bank will be right in the middle you see signs of recovery in the word well i think you know if you could talk about the share price is one thing 10 years ago the share of prize was at about 50 euros it's now at about 6 years i think that there are serious concerns about the health of the bank still you know it's still losing money so you know i think that it is it is a problem for the german government but when i was covering wall street a decade ago during the financial crisis the other banks in the u.s. were always pointing to george bank and saying if it weren't for the german government standing behind george bank they would definitely need a bailout and i think you know this is always sort of the unsaid thing is that everybody knows that the german government will back door to bank up at the end of the day because it's just too big to fail it is literally too big to fail so than a trap or one a long term customer of deutsche bank mentioned in the fin. is donald trump

and buzz feed news research identifies around 1300 to dubious real estate transactions in. apartments in trump own buildings so does that make the president of the united states complicit in these transactions is he in violation of anti money money laundering laws i don't know if i can like absolute the. value of that . dude can definitely see in these fires but also as i thought you said like before long before that lots of his business transactions are connected to gangsters to money launderers to most of those to people from eastern europe and asia. definitely trying to inject money into the us i could give some examples in the fives like people who definitely didn't get their money from like honest work by apartments and you have like

a story from boston from last year that laid out in detail how he tried to like finance a trump tower in moscow and give the biggest. so they're like lots of lots of things that he's doing with the help of the little bank that are definitely not not really key message you investigative journalists and also some lawyers have long contended that the smoking gun in trump's relations with russia is in fact financial to the fin send it leaks offer any proof of that well they certainly offer some indication that there is more than meets the eye and i think this is the reason that trump has been so forceful in trying to prevent investigators in the united states from getting either his tax returns or his financial real records related to georgia bank and has to be said it's not just the doj being did business with donald trump they were the only bank he was willing to lend him money when all of the other major lenders in the united states said you know there's no way we're

giving this guy any more money so they have a i think also a lot to answer for here so it's not in their interest either to really provide this information and you know the courts are. you know dealing with with this issue as as we speak so you know it's not likely to happen before the election but i think some day we'll know more about both donald trump's finances and the world at large a big split let me ask all of you because we're nearly at the end of our time mentally you described the fact that the banks in some sense are overwhelmed by the sheer volume and complexity of these things artificial intelligence could pose a possible solution i think could be part of a solution i'm not enough of an expert on you know explaining exactly how that could work but because it is so complex it involves i think there's so many little pieces of a puzzle i can well imagine ai playing a big ball thank you one word answer is anything really going to change. if the

regulators get more ball maybe. in the long term now. thank you very much to all of you for being with us thanks to all of you for tuning in see you soon. come up. with. a member.

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