Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Unintended consequences of anti-money laundering enforcement

with one comment

Image courtesy of DollarPhotoClub.com.

Image courtesy of DollarPhotoClub.com.

One of the general rules of life seems to be that when one person does something really bad, the larger group pays the penalty.

You remember the drill – one person in the school classroom misbehaves on the playground and the whole class looses recess.

Or one of your coworkers breaks etiquette of the office and there is a new restrictive rule that inconveniences everyone. One person pushes the boundary on expense reimbursement and everyone gets new reporting requirements.

Well, same thing is emerging with the tremendous effort against money laundering.

Check out Account Closed: How Bank ‘De-Risking’ Hurts Legitimate Customers / In their hunt for money launderers, regulators are forcing banks to shut down branches and reject business At the Wall Street Journal on August 13.

The two attorneys writing this article point out there are zero banks left in the U.S. that will wire money to Somalia. As a result, the poor, non-terrorist people living there who are dependent on remittances from their family in the U.S. for their survival now have no way to get money wired into the country.

Also, the article says JP Morgan has closed 100,000 accounts and Standard Chartered has dropped 70,000 businesses. Why? Too risky to deal with them because those customers might, just maybe, launder money some day.

Three banks have closed their branches in Nogales, Arizona to eliminate risk of somehow getting drug money into the branches. Local businesses have been devastated.

This isn’t a case of having to remind your tellers to report any customer walking in with a wheelbarrel filled with bundles of $20s. This isn’t a case of just avoiding having some carpenters widen the teller windows so it is easier for druggies to push their bales of cash across the counter (That was HSBC’s customer service model).

No, this is closing the branch so no deposits of a few thousand dollars ever gets by.

Slamming banks (which is absolutely justified) for operating full-blown departments that wash wires to hide intentionally dealings with Iran et.al. has the unintended consequence of shuttering all the branches in Nogales and separately closing at least 170,000 accounts.

Written by Jim Ulvog

August 25, 2015, 7:08 am at 7:08 am

One Response

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  1. […] I previously discussed Unintended consequences of anti-money laundering enforcement. […]


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