The trade group representing the largest American banks released a proposal Thursday to revamp post-9/11 money laundering rules that the financial institutions argue have forced them to spend billions on expanded investigation and reporting duties — with little benefit to law enforcement or the country’s security.
The report was issued by Clearing House, which lobbies on behalf of 24 commercial banks, including the three largest American banks: JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC) and Wells Fargo & Co (NYSE: WFC).
Details Of The Report
“Financial institutions devote vast resources to activities that could easily be performed centrally by government or some other party,” Thursday’s report said.
Anti-money laundering and terrorist financing regulations require banks to file what’s known as a Suspicious Activity Report, or SAR, in order to provide information to law enforcement. The number of reports filed annually has steadily climbed, from 669,018 in 2013 to 958,735 in 2016. While there are more of them, a “declining percentage” of SARs provide law enforcement value, the Clearing House’s report said.
Big banks have taken to overreporting possible financial crime in the wake of large fines levied against them in recent years, according to Reuters.
HSBC Holdings plc (ADR) (NYSE: HSBC) agreed in 2012 to pay $1.9 billion to the federal government in 2012 as a fine for failure to prevent money laundering by Mexican drug traffickers, according to the wire service. Two years later, JPMorgan agreed to a $2.6 billion fine after it was alleged the bank failed to report suspicions of fraud at Bernie Madoff’s firm.
Some of the recommendations for regulatory reform made by the big banks include:
- A more prominent coordinating role for the Department of Treasury’s Office of Terrorism and Financial Intelligence.
- A de-prioritization of investigation and reporting of activity that has low consequences for police or the country’s security.
- The return of sole supervision over large, multinational financial institutions to the Financial Crimes Enforcement Network, or FinCEN.
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