Six Banks Fined £2.6bn for Forex Manipulation

US and UK regulators have fined six banks a total of £2.6bn (US$4.3bn) over their traders’ attempted manipulation of foreign exchange rates.

The fines were levied against HSBC, Royal Bank of Scotland (RBS), UBS, JP Morgan Chase, Citibank and Bank of America.

A separate investigation into Barclays, which had also been expected to announce a settlement with the regulators, is continuing. “After discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement,” a statement issued by Barclays read.

The penalties were issued by UK regulator the Financial Conduct Authority (FCA), which fined five of the banks excluding BofA a total of £1.115bn, while the US Commodity Futures Trading Commission (CFTC) added a further US$1.4bn.

The US Office of the Comptroller of the Currency (OCC) collectively fined JP Morgan Chase, Citi and BofA $950m, while Switzerland’s Financial Market Supervisory Authority (FINMA) fined UBS 134m Swiss francs (CHF).

Several senior traders at the banks have already been put on leave and the UK’s Serious Fraud Office (SFO) is reported to be preparing potential criminal charges against individuals alleged to have masterminded the scheme.

Separately, the Bank of England (BoE) – which had been accused of knowing about the foreign exchange scandal, but doing nothing about it – published a separate report by Lord Grabiner, clearing its officials.

“There was no evidence that any Bank of England official was involved in any unlawful or improper behaviour in the foreign exchange [FX] market,” it said.

Dark Data at the Heart

Commenting on the penalties, Freddie McMahon, director, strategy and innovation at smart data specialist Anomaly42, said: “The moral decadence of traders and banks generally has once again shaped the headlines. But while dubious behaviour has been at the heart of this latest scandal, the real issue lies within Dark Data.

“The evidence of corruption, unethical conduct and inappropriate behaviour among traders in this latest forex-rigging scandal will have been there since the beginning. The problem is that the banks’ compliance departments, reliant on legacy technologies, have not been able to see it because it lies within Dark Data.

“Dark Data is data that exists but which isn’t known about. Banks and their compliance departments can report on known data but not on unknown, or unstructured data.

“However, it’s in unknown data, not the structured data of databases, key performance indicators (KPIs) and dashboards, where suspicious activities generally reside. One of the main causes of Dark Data is the fact that data is so heavily siloed within banks and across banks. This plays a key role in preventing suspicious activities coming to the fore. No one bank is connecting the dots. Instead, each sits within its own data silo.

“While corrupt traders may be communicating effortlessly, the banks are not and if we’re to prevent further banking scandals, this has to change.”

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