Big US banks to call for an overhaul of financial crime and anti-money laundering rules

Some of the largest US banks are to call on the new administration in Washington to undertake a wholesale overhaul of financial institutions’ responsibilities for investigating and reporting potential criminal activity, according the Reuters news agency.

The banks maintain that rules imposed on them in the wake of the 9/11 terrorist attacks on New York and Washington and toughened up by the Obama administration as a result of the 2008 financial crisis are too onerous and ineffective, sources who spoke to the news agency said.

Proposal this week

The Clearing House, which advocates on regulatory, legislative and legal public policy issues on behalf of the largest US commercial banks, could publish proposals to ease banking requirements as soon as this week.

It has repeatedly expressed its concerns over increasingly tough compliance requirements but has hitherto not called for change in public.

Washington changes

The proposal would signal rounds of intensive lobbying of regulators as well as members of the Senate and House of Representatives finance committees.

President Donald Trump has already issued a memorandum to scale back the 2010 Dodd-Frank Act, which is responsible for creating more stringent rules regarding compliance and reporting standards for banks, bank capitalisation and a raft of other measures intended to prevent a repeat of the 2008 financial crisis.

Reporting concerns

Banks are particularly concerned that they are legally required to report activity they suspect may be associated with terrorists or criminals laundering money through the US financial system.

Bank employees are required to file Suspicious Activity Reports (SARs) with the authorities if they suspect transactions could be part of a crime. Over one million SARs were filed in 2016, a figure some say has been reached by record penalties imposed on banks for failures to alert the authorities of suspected criminal activities.

New regime

The Clearing House is expected to call for a new regime under which banks do not investigate and report every transaction that could possibly raise a red flag, according to sources Reuters says are close to the anticipated proposal.

Calls are expected for banks to focus on investigating and reporting only on transactions based on specific concerns relayed to them by the authorities.

The Clearing House is also expected to call for an information-sharing platform to be established to allow banks to share data among themselves about possible criminal transactions.



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