FinCEN Files: Investigation into Dirty Money Transfers from Major Global Banks

At least $ 2 trillion in suspicious transactions were carried out between 2000 and 2017 by several major global banks. This is what an investigation by the International Consortium of Investigative Journalists, made up of 400 journalists from the media in 88 countries, including the investigation units of Radio France and the newspaper Le Monde, reveals.
For their investigation, ICIJ journalists were able to obtain "suspicious activity reports". These are top-secret documents that US bank internal compliance officials send to US financial intelligence agencies when they detect questionable money transfers.

According to these documents, 2,000 billion dollars in suspicious transactions may have been carried out. It is dirty money linked to drugs, corruption, organized crime and terrorism.

Large banks are singled out like JP Morgan, Deutsche Bank, Bank of New York Mellon or HSBC. They ensure, however, that they make significant efforts to combat financial crime an…

Stock market: the cruise is no longer fun

The issue that concerns everyone these days is obviously the CoronaVirus. Since our last article, the virus has been officially classified as a pandemic by the World Health Organization. There are now more than 300,000 positive cases and more than 11,000 deaths. Many countries have now taken drastic measures by imposing several closings and tightening borders.

Carnival Corp, Royal Carribean Cruises, Norwegian Cruise Lines

It is clear that the majority of sectors of the economy will be affected, but one industry that has suffered a particularly brutal blow is that of cruise lines. By investigating why, we hope this will help investors avoid such calamities in their portfolios.

To start, cruises are big purchases of a discretionary nature. They are far from essential. In difficult times, goods and services in this category generally suffer the largest declines.

Cruise lines are also companies that require a lot of capital. The 3 largest cruise lines (Carnival Corp, Royal Carribean Cruises, Norwegian Cruise Lines) have a collective asset base of $ 92 billion, most of which are obviously ships. Such an asset base generates significant fixed costs which are difficult to reduce when income disappears. In an era like this, when governments prohibit ships from docking on their shores due to fear of the virus, juicy profits quickly become significant losses.

To compound the problem, these large fixed costs are funded by large debts, a total of $ 29 billion for the 3 cruise lines mentioned. Take the example of the biggest player, Carnival Corp. The company has $ 7.3 billion in debt maturing over the next 4 years. The new medium vessel has a useful life of 30 years. There is an obvious disconnect between assets and liabilities, and over the next few months you will hear many stories of creditors knocking on the doors of these cruise lines.

With this confluence of factors, the cumulative returns of these 3 cruise companies listed on the stock market fell sharply. Their stocks have fallen respectively 77%, 82%, 84% so far this year.

To make matters worse, these 3 companies are incorporated in Panama, Liberia and Bermuda to pay low tax rates. When the time of the tipping point approaches, they are likely to find it more difficult to appeal for help to governments and angry citizens.

Although the problems ahead may be very varied, investors are re-learning how dangerous capital-intensive and debt-intensive activities can be. Sometimes it's better to know what to avoid than to know what to buy to weather the storm.