2020’s Biggest Bank Scandals

·4 min read

When the pandemic struck and the world changed for the worst in what felt like an instant, and there was some concern that there would be a run on the banks. In March, Congress granted the Federal Deposit Insurance Corp. permission to intervene in such a scenario. Since then there have been strains on liquidity and a pesky national coin shortage, but no instances of apocalyptic chaos as some feared earlier. But that’s not to say there wasn’t plenty of drama going on in the banking world — it was just taking place in the courts instead of in the streets.

2020, a record year for all kinds of bad things, has seen quite a few upheavals behind the scenes at a number of banks. Back in February, Wells Fargo agreed to pay $3 billion to settle criminal and civil charges resulting from its mistreatment of customers. The widespread consumer abuses — which went on for over a decade —saw Wells Fargo employees using fraud to reach lofty sales goals, including opening millions of accounts without consumer consent. But Wells Fargo was not the only banking institution to raise judiciary eyebrows for seriously shady behavior. Here’s a look at five more bank scandals that appalled investors in 2020.

Last updated: Nov. 16, 2020

Los Angeles, California - October 9, 2019: Chase Bank on Hollywood Blvd and Western Ave, Los Angeles.
Los Angeles, California - October 9, 2019: Chase Bank on Hollywood Blvd and Western Ave, Los Angeles.

Deutsch, Chase and Others Accused of Laundering

In September, several mega-banks were outed for moving large sums of allegedly illicit funds. HSBC, JPMorgan Chase, Deutsche Bank, Standard Chartered and Bank of New York Mellon were all accused of moving dirty money for over 20 years, despite evidence that they knew the funds were illicit.

The U.S. Financial Crimes Enforcement Network (FinCEN) files contained more than 2,000 documents that evidenced the possible wrongdoing, which were leaked to Buzzfeed News and other media organizations. Around the time the story broke, FinCEN announced major changes to its anti-money laundering program.

Boston, USA - June 8, 2012: The BNY Mellon Center in downtown Boston, Massachusetts.
Boston, USA - June 8, 2012: The BNY Mellon Center in downtown Boston, Massachusetts.

Bank of New York Mellon: Currency Manipulation

The Wall Street Journal led an in-depth investigation into a currency manipulation scheme at Bank of New York Mellon. The scandal technically took place years ago but the saga didn’t come to an end until 2020 when the U.S. Securities and Exchange Commission awarded nearly $50 million to the whistleblower who reported the crimes. The whistleblower, a Wall Street insider who worked at Bank of New York Mellon, alerted the SEC about the bank’s nasty habit of “overcharging big clients on currency trades.” Fifty million dollars is the most the SEC has ever granted a whistleblower to date.

A cityscape of contrasting architectural eras, styles in Lower Manhattan along Vesey Street.
A cityscape of contrasting architectural eras, styles in Lower Manhattan along Vesey Street.

Goldman Sachs: Foreign Bribery

In October, Goldman Sachs Group confessed to conspiring to violate the Foreign Corrupt Practices Act (FCPA) with a scheme to pay over $1 billion in bribes to foreign officials in exchange for underwriting approximately $6.5 billion in bond deals for a Malaysian Fund, 1MDB.

Goldman’s parent company dodged criminal conviction to resolve the investigations as part of a deal. The bank gets off scot-free so long as it cooperates with ongoing U.S. investigations and submits compliance reports. Because the bank was able to defer prosecution, it actually fared better in the public eye than one would expect; its shares rose 1.2% after the news that there would not be prosecutions at this time.

Hong Kong Central China April 02 2019 Standard Chartered Bank headquarters building in Central, wide of sign - Image.
Hong Kong Central China April 02 2019 Standard Chartered Bank headquarters building in Central, wide of sign - Image.

Standard Chartered: Poor Controls and Breaching Sanction

Standard Chartered was ordered to pay $1.1 billion to settle allegations of poor controls on money laundering and breaching sanctions against foreign countries, The Guardian UK reported. The U.S. treasury department said the fines Standard was ordered to pay settled “apparent violations” of sanctions imposed against Burma, Zimbabwe, Cuba, Sudan, Syria and Iran. Standard didn’t put up a fight and said it “accepts full responsibility for the violations and control deficiencies.”

This is a rare scandal because in this case, the resolution actually cost the bank money — though it did take time. Much of the sketchy activity took place in the mid-2010s, around the time it was ordered to pay $667 million to settle U.S. allegations of sanctions breaches between 2001 and 2007.

LOS ANGELES, CA/USA - AUGUST 30, 2014: Bank of America Center.
LOS ANGELES, CA/USA - AUGUST 30, 2014: Bank of America Center.

Bank of America, US Bank and Others Accused of Preferential Treatment

In April, Bank of America, Wells Fargo, Chase and U.S. Bank were each hit with accusations that they’d been unfairly favoring Paycheck Protection Program (PPP) loan requests from select customers to reel in fatter fees. According to the lawsuits — all filed individually — the banks “concealed from the public that it was reshuffling the PPP applications it received and prioritizing the applications that would make the bank the most money.”

The $349 billion PPP program, meant to support small-business owners during the pandemic, was quickly drained — leaving many in the lurch. A July report from the U.S. Chamber of Commerce found that more than half of small-business owners worry about having to permanently close. Tens of thousands of small businesses across the U.S. have already closed their doors forever because of the pandemic.

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