America’s biggest banks are pushing for changes in how money laundering and other financial crimes are investigated.
Shifting oversight – something that would have been impossible during the Obama administration – has already been suggested by the trade association for some of the nation’s largest financial institutions. The Clearing House, industry representative of JPMorgan Chase & Co., Citigroup, and Bank of America, has long had issues with the rising costs, complexities, and – it says – the lack of effectiveness of the current system.
With Trump championing dramatic cuts in regulation throughout government, big banks are clearly emboldened. Just weeks into the Donald Trump presidency, the Clearing House has called for substantive changes in the current rules. It’s the first time the organization has taken such a bold step, according to a recent Reuters article.
Reuters reported that the trade group’s proposal promises to kick into gear “an intensive lobbying effort targeting bank regulators and members of the Senate and House of Representatives finance committees.”
Given that, the group’s representatives will surely be interested in speaking with U.S. Senator Dean Heller of Nevada, whose assignments include seats on the finance and banking committees. Consider this an issue to watch.
The push by the banking titans is likely to reverberate through the casino industry. In recent years, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has been both highly critical and complimentary of gaming, applauding its improved understanding and responsibility when it comes to knowing its customers and reporting suspicious activity.
While some casino licensees have been slow to evolve, and have paid millions to settle federal investigations into potential money laundering violations, the industry in general has received praise for its progress. When the Financial Action Task Force (FATF) late last year released its report on money laundering issues in the United States, it noted that “the gaming industry has taken significant steps to comply with AML/CFT [combatting the financing of terrorism] requirements…casinos have not only increased their compliance spending but have also put in place mitigating measures above the requirements of the BSA based on their risk.”
All well and good, but is that progress in danger of being diluted in the name of deregulation?
America’s big banks, sources tell Reuters, are in the process of calling for a “complete overhaul of how financial institutions investigate and report potential criminal activity, arguing that rules imposed in the years after the Sept. 11, 2001 attacks and strengthened during the Obama administration are onerous and ineffective.”
But Global Financial Integrity, an organization that tracks money laundering issues and argues for increased enforcement, isn’t buying it. “I have concerns with the banks even doing what they are supposed to do now,” Heather Lowe, director of government affairs at the group, told Reuters.
Trump signed an executive order earlier this year capping new business regulations. But the Financial Times reported anti-money-laundering regulation may be one of the few areas the Trump administration plans to maintain the status quo. Some banking and regulatory sources concurred, using the president’s tough talk on terrorism as a sign of the direction that Trump might go on this issue.
One longtime IRS veteran, who spent a career tracking money laundering, tells me any changes that shift more investigative responsibility away from the banks and onto FinCEN could create a self-fulfilling prophesy. Without sufficient personnel to handle a vastly expanded role, investigations could easily be delayed or derailed entirely by hiring freezes and budget cuts.
With the country’s largest banks about to test the waters in an era in which the president shouts about the need for deregulation, can calls for change inside the casino industry be far behind?
Contact John L. Smith at jlnevadasmith@gmail.com. On Twitter: @jlnevadasmith.
