Fear of regulatory trouble is compelling some banks to turn down business to avoid the huge compliance costs of vetting potential clients, attendees at a banking conference in London heard Thursday. In response to increasing fines and growing compliance demands from the Financial Conduct Authority (FCA) and other regulators, several banks in the United Kingdom have dropped individuals and entities engaged in businesses or from regions that are considered high-risk for money laundering and other financial crimes. Both Barclays Bank and HSBC have been the target of public criticism for taking such action. "When a bank shuts down its office...
Britain's top bank association will soon review whether taxes, regulatory uncertainty and toughened compliance standards are prompting financial institutions to threaten to move their headquarters out of London.
Short of abiding by the Community Reinvestment Act and other prohibitions against discriminatory lending, banks still have the right to choose who they'll do business with. While that seems like an obvious statement, it gets drowned out in the debate about "de-risking."
In a rare gesture last week, a federal regulator signaled to banks that they might relax when it comes to implementing certain anti-money laundering policies. There was only one problem: no one is likely to listen.
A number of large U.S. and international banks are dropping customer accounts and services tied to high-risk geographical regions and lines of business in response to regulatory pressure, including enforcement actions.
The British High Court injunction Tuesday against Barclays ending its relationship with Somali money services businesses is likely to keep the bank from dropping the accounts for five or six months, according to compliance experts.