International banking is heading for another public relations disaster with the release and leaks of the FinCEN files. While many leading brands will be having hard conversations with clients worried about their own data privacy, fundamentally there will be little challenge to the use of the US to process transactions and as the world’s leading offshore wealth management centre.

The Financial Crimes Enforcement Network (FinCEN) files released by the International Consortium of Investigative Journalists threaten leading international wealth managers’ reputations as, once again, leading banks are accused of money laundering and hiding wealth from questionable sources and leaks.

High-profile cases of financial transactions involving fraudsters and politically exposed persons will result in damaged reputations across the banking sector, even for banks not highlighted in the regulatory reports. Any bank that helps wealthy clients move money and invest internationally will be tarred with the same brush, in much the same way the Panama papers damaged the reputation of international banks in 2016.

Short-term, this is likely to dampen the previously growing enthusiasm for offshore wealth management seen by GlobalData in its tracking of leading offshore booking centres. Our surveying of the market shows that the proportion of high-net-worth (HNW) offshore wealth has more than doubled since 2014, reaching 32.5% at the end of 2019, with the leading offshore centre still the US by a long margin.

The flight to safe havens has seen even more HNW wealth booked abroad, on track for 38.5% according to our 2020 Global Wealth Managers Survey as well.

HNW clients will not be pleased with the leaks and resulting negative publicity surrounding key banking partners, particularly as they will be heavily exposed to the US financial system. The US is the world’s number one safe haven, and it would be hard to limit exposure in the best of times, while well-nigh impossible in times of crisis like the COVID-19 pandemic.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Still, HNW investors do not like being associated with scandal, and banks mentioned in the papers will certainly need to work overtime to retain the confidence of their clients. Direct reassurance from relationship managers was most effective in limiting churn in previous crises, and all banks will need to make use of them in this one as well.