Does Fear of Terror-Finance Cases Drive Big Banks From Risky Regions?
ByBig banks believe that lawsuits alleging that they are financing terrorism cause “de-risking,” and the banks are warning that this is a bad development. What are they talking about?
De-risking is jargon for pulling out of places—perhaps the Palestinian territories or Somalia—where doing business has led to regulatory penalties and/or lawsuits. As government agencies and plaintiffs’ attorneys have increasingly accused international banks of engaging in money laundering and financing terrorists, some banks have cut ties to clients in the Middle East and Africa.
Banks describe de-risking as a way to limit exposure to U.S. government fines and court liability. The banks further claim that the trend has resulted in a scarcity of banking services for poor people who depend on remittances from relatives in the West and for nongovernmental organizations devoted to humanitarian causes. Further, the banks assert that cutting off troubled regions from the international financial system will result in more—not less—crime and terrorism…
Does Fear of Terror-Finance Cases Drive Big Banks From Risky Regions?
