Bankers or Thieves?

The financial sector, especially the banking subsector; has a lot of players involved. However, not all these ply their trade in the honest manner they should. This leaves many people wondering if they are actually bankers or thieves in disguise.

This article seeks to address this question by focusing on a number of illegal activities that have been done in the past and are still being perpetuated by some banks, albeit under the table. These include:

Charging Negative Interest Rates

Normally, depositors usually expect the money that they deposit in banks to gain interest over the period of time that it is kept there. However, this is not the case when some banks decide to do just the opposite: they charge for depositing money with them.

This has been done in the backdrop of economic instability such as the current situation in Switzerland, where the Swiss National Bank is charging a -0.25% interest on large depositors. This and similar moves by such institutions discourage investors, as it passes the burden of poor economic policies by the regulators on the bank clientele.

Trading Toxic Debts

This is another activity done by banks that very much disadvantages investors and reduces their confidence in the institutions. It has been likened to corporate gambling.

The practice involves loaning out money to people or companies that have little chance of paying back the debt at all or with interest. This may lead to an economic crisis and massive financial loss.

Creating Fake Investment Sectors

This is a practice that is against international security laws and involves inducing investors to make sale or purchase decisions based on fictitious information, thus leading to the investors losing their money or stock.

False Financial Reports

Often, financial institutions have been found to produce and present fake financial reports that are either aimed at hiding some illegal activities that go on in them, or to portray themselves as being in a better financial position than they actually are.

Money Laundering

Moving money from the underground to the mainstream economy as well as tax evasion maneuvering acts are sometimes executed with the help of banks which pass the money through their chains. This works against the mainstream economy as the appropriate tax money is not injected into the economy. It also serves as a means of funding criminal activities.

A case study is how it has just been alleged that HSBC was involved in a tax evasion scheme that saw its CEO shelter millions of pounds in a Swiss Bank account.

Running Away From Taxes

The banks themselves have sometimes been involved in illegal activities aimed at shielding them from taxes. One such example is the BMP scandal which exposed massive irregularities in the sector.

Ponzi Schemes

The Ponzi scheme involves banks paying dividends to older investors using the capital that has been invested by newer investors instead of the profits that they have rightfully earned.

One of the well-known example of such activity was the massive Ponzi scheme at Goldman Sachs investment bank, where the conglomerate was ordered to pay up to $10 million as claim to all the investors who had fallen victim to the fraud.