Leading banks, from Deutsche Bank to JP Morgan dropped under pressure yesterday amid reports that leading banks moved illicit funds, dating back to the last two decades.
Shares of Deutsche Bank dropped over 8%,JPMorgan fell 3.1%. Goldman Sachs fell 0.4% & Citigroup lost 2%.
Fun fact: The sell-off was triggered by a new investigation by BuzzFeed under the discovery that over $2 trillion in transactions between 1999 and 2017 were flagged by internal compliance officers as suspicious funds and/or money laundering.
Deutsche Bank appears to have facilitated $1.3 trillion of suspicious money in the files, while JPMorgan disclosed $514 billion.
Deutsche Bank said that the report and investigation “is not new information to us or our regulators.”
According to the New York Times, BuzzFeed’s findings were that Standard Chartered appears to have helped move funds on behalf of a Dubai-based company that reportedly had ties to the Taliban.
The biggest banks across the world each file tens of thousands of suspicious activity reports every year, and the total number has increased significantly over the past decade.
This caused global stocks to drop across the board yesterday.
Dow Jones Industrial Average fell by 3.4%, while S&P 500 lost 2.6% and the tech-heavy Nasdaq plunged 2.1%.
In unrelated news, gold price also plunged by over 3% down to $1,900 level as investors begin to sell-off assets during a volatile period where the week kicked off with the news of Ruth Bader Ginsburg’s death, which poses uncertainty to congress, rising US-China tensions and increasing Covid-19 cases in the UK.
This week’s case might be a recent case of the “cash is king” mentality
The big banks’ money laundering reports may have added to the sweeping markets blow, but shouldn’t contribute to anything in the mid-long term sentiment.