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Update on Regulatory Attitudes to AML and De-Risking in the U.S.

Payments & FinTech Lawyer

In this article, Lamia Matta* and Ann Sultan discuss the phenomenon of "de-risking" among financial institutions and the changing attitudes of U.S. regulators with respect to anti-money laundering (AML) regulation.  

With regard to "de-risking," Matta and Sultan write that "[r]egulators -- in the U.S. and internationally -- as well as multinational financial institutions, have noted that the changing regulatory and enforcement landscape since the 2008 financial crash is causing large global banks to terminate client relationships they perceive as 'high risk.'"  They add that "[t]his is causing a reduction in correspondent bank relationships," which, they note, "creates reduced access to financial services for certain customers and certain regions."  Regulators have voiced concerns about "de-risking" because of its negative impact on developing nations and the international economy. 

With regard to the changing regulatory landscape, Matta and Sultan note that regulators in the U.S. have taken steps to enhance the due diligence and data collection financial institutions must do on their customers, via the U.S. Department of the Treasury's Customer Due Diligence final rule, Financial Crimes Enforcement Network's (FinCEN's) August 2016 proposed rule, and best practices guides. "The anti-money laundering regulatory landscape may continue to change in the coming months, as FinCEN evaluates the comments it received on its proposed rule, and it and other regulatory agencies work to balance their various enforcement objectives with concerns raised domestically and abroad regarding de-risking," Matta and Sultan write. "In this dynamic environment, staying up to date on current regulations and policy is essential for businesses affected by the U.S. regulatory framework."

*Former Miller & Chevalier attorney