Banking officials in the US have agreed to consider revising money-laundering regulations after a new report blamed tough regulations and heavy fines for a rash of bank closures along the Mexican border in recent years.
Several banks have been concerned about the risk of trade-based financial crime associated with the US-Mexican drugs trade, but the closure of banks on the two countries’ border is hurting legitimate traders.
The report published by the US Government Accountability Office found that 80 per cent of border banks had terminated personal or business accounts for reasons related to the Bank Secrecy Act and money laundering regulations.
Banks are closing branches and terminating accounts in the process of de-risking their business, a process that is creating problems for small businesses and forcing some traders to go without bank accounts in parts of Arizona, New Mexico and Texas.
The report recommends that the Federal Reserve, Federal Deposit Insurance Corporation and other agencies should conduct comprehensive and retrospective reviews of the regulations.
“The regulations have helped detect money laundering and other financial crimes, but there are also real concerns about the unintended effects, such as de-risking,” the report concludes.
The report entitled Regulators Could Take Additional Steps to Address Compliance Burden can be found here.
Categories: Trade Based Financial crimes News