Of the atlantic to germanys 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 of arks terrorists how corrupt are the banks. To. Come up. Welcome to to the point its 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 its a pleasure to welcome our few carnatic to the program hes chief europe correspondent for politico and he believes this councils are just the latest indication that. Germanys Banking Sector is neither financially nor culturally sound. And great to have with us as well then to lead a fun creative she works for the british economist and she thinks justice do 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 whats going on here sure both the news and the u. S. Or u. S. Investigative team shared these with the i. C. J. The International Consortium of the to get a phone list and they got in all of these different i mean joins us from all over the world like they did was put in the papers part of the papers all these other big leagues over the last few years and then about 400 people went to work and which research cleaned 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. Doesnt comment on that im sorry ok Matthew Carney chick 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 seem. Well to be honest i dont think we can be sure and 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 were in there are all kinds of data leaks like this weve seen over the years and journalistically its very exciting but we are. I dont really know even the people who are reporting it what the motivations of or the people who are leaking it who is 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 im going to define great 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 were being financed by ill gotten gains why should they care about yet another revelation that the rich dont play by the same rules as the rest of us it doesnt come as a huge surprise youre right but 1st of all is to the extend that the sums involved you know 2 trillion dollars that starts you know i think most of us cant 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 its not used to kindergartens or road so schools i mean ordinary people suffer because this type of Money Laundering is happening so its not something thats only concerns only gods or drug the list it concerns a lot of us. Didnt record the institutions that we are seeing implicated here are some pretty last reus names j. P. Morgan h. S. B. C. Deutsche bank just to name a few why them is there something particular about these banks or are they simply the tip of a much bigger iceberg so there are a lot of banks and these are obviously the biggest ones i think why they are so big and over the everyone like us 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 youll have like my they want to like invest inject into the real economy you want to do that. In the dollar market in the u. S. So they they use like Smaller Banks like afghan united or 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 weve never heard of theyre not generally in the public view some of them 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 theyre operating and this network of banks is daniel says provides them you know it 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 games he purchased a bunch of laundromats now todays criminals oligarchy and terror groups are working at a distinctly larger scale. Laundering doesnt 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 socalled 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 all forties are not as well networked as the criminals why is it so difficult for lawmakers to put an end to Money Laundering. Eventually let me pass that question straight to you and i mentioned in fact policymakers in good intentions at the outset of the show after revelations like the Panama Papers the luanda the leaks and so when theres been a lot of talk and also some action on cracking down yet policymakers dont seem to get the problem under control why they dont and the problem is that for a bank thats a conflict of interest because. Its to maximize of profits needs to make money these this type of business is very lucrative. Its 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 should not have accepted and should have known in the 1st place because maybe nobody will notice. So daniel 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 isnt this filing of these reports a 1st step toward compliance yeah i think its important that these reports get fired the problem is i think twofold one is banks into making money they must make money because. For some reason im done with the most mint and so its really every time they see something we had in their accounts of the 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 lets see if the authorities do something with it and we just continue our relationship with the client and this is what happens all the time in the fins and files that like a bank file its a report its for like for normal person looking at the scene 3 to clear the should not be money being moved through the larger bank or comments from whatever but they continue their relationship and then they say we did this report and as long as there are thoughts dont do anything we are fine with like working with these clients and i think thats a problem because the authorities and we might speak of both the state as well definitely not well equipped enough to like these illicit money flows let him 1st and lets come back to that in just a moment but matthew let me bring you in also in response to what we just heard from fed alina because your Opening Statement said that this is a problem of the defective Corporate Culture at places like deutsche a bug but arent we in a way putting banks in a contradictory position their Business Model is going to lead is said to make money and yet were also in a sense expecting them to be self and forcers well i think weve made it too easy 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 thats thats the end of the story we dont. 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 theyve really dropped the ball the policymakers 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 this heartbreaking if you think about it you know what good could have been done with the money that left the country. Absolute in 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 its not a very good at its job should have done a better than being the germans or i mean actual supervision or a Supervisory Authority a 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. Best of intentions move slowly fall a problem off such a scope i do want to come back to the german picture in a moment but lets 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 journalists consortium behind the fence and leaps in leaks including buzz feed said that the us is the machine room room of Money Laundering so whats behind that paradox. Like we said before i think the main thing is that its its really there is has to be a lot of effort put into finding all a black hole just like the finns 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 you know every month i dont know but its like its millions of reports every year and they have 270 people to check on them like how are they able to go go off to everyone everything and everyone so i think thats like the main thing is its a huge system like billions i think its 5 billions of money every day laundered all over the would. Its very complicated these people go to Great Lengths to hide the methods and then if you have like like a couple of dozen people hunting them down and thats 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 doesnt mean that its not going to be interested in the illegal activity but if people are laundering money in you know congo thats not going to be high on the United States governments 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 soames around the world for companies and governments and so forth so its very difficult to keep track of it all but i dont think that they have a real you know baked in incentive to go after what you know happening in the 3rd world so lets talk about europes incentive because in fact the 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 worlds tax havens including to some leading European Centers like the netherlands switzerland ireland lexan 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 were seeing day globalization and a retreat from multilateralism well in europe its 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 didnt 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 thats been the history of it and the people who are policing it are often Civil Servants who do not have the resources they often dont have the vision to go after these things and its only intel 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 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 did the latest findings of phosphate and others have proven that germany is too lax i mean Deutsche Bank plays a very prominent role in doing 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 its germanys biggest bank germanys old one of germanys oldest and biggest banks so surely that shows that japanese has been too lax lets dive deeper in the role of a bank that in fact once was the titan of germanys financial sector. Has been the topic of prior reports of dubious dealings. From the flagship of german business to a Scandal Group dortch a 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 europe or. 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. U. S. 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. How corrupt is. 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. Date at the time of the beginning of the year the price did actually rise which hasnt happened in the minutes seemed that fine was stabilizing but then of course 2. 00 things happened one was that crisis which which which hits the fan quite badly and now this thing the face revelation so it doesnt really look as if stabilising anytime soon so matthew recover. In share price is one part of the issue of course to recover is also a question of whether they can cover 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 of even rented the house i mean these are extraordinary measures that theyve gone to over the years and theres 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 do 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 price was at about 50 euros its now at about 6 euros i think that there are serious concerns about the health of the bank still you know its still losing money so you know i think that it is it is a problem for the German Government 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 werent 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 backdoor to bank up at the end of the day because its just too big to fail it literally too big to fail so then a drop or one a long term customer. Mentioned in the fin leaks 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 munty Money Laundering laws i dont know if i can like absolute the. Value of that. Dude can definitely see in these fires but also and i thought you said like before long before that lots of his business transactions are connected to gangsters to money launderers to mobsters to people from Eastern Europe and eurasia. Definitely trying to inject money into the us market would give some examples in the fights like people who definitely didnt 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 tomtom on most college gift the biggest. So theyre like lots of lots of things that hes doing with the hope of village a bank that are definitely not not really key mess you investigative journalists and also some lawyers have long contended that the smoking gun in trumps 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 really records related to georgia back and has to be said its not just the Deutsche Bank 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 theres no way were giving this guy any more money so they have a i think also a lot to answer for here so its 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 its not likely to happen before the election but i think someday well know more about both Donald Trumps finances and the world at large a big split let me ask all of you because were nearly at the end of our time then the lady you described the fact that the banks in some senses are overwhelmed by the sheer volume and complexity of these things Artificial Intelligence could it pose a possible solution i think could be part of a solution im not enough of an expert on you know explaining exactly how that could work but because it is so complex that it involves i think theres so many little pieces of a puzzle i can well imagine playing a football 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. As. A member. In the. 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