Embassies and Banking: No End to Concerns
As many administrators at embassies and consulates know, banks are de-risking -- eliminating risk they perceive in international transactions. The prestige of servicing mission accounts is outweighted, many bankers believe, by the risk of mostly corruption-related exposures, known as Politically Exposed Persons. A Washington, DC, bank that was known as the go-to bank for embassies had to plead guilty for its representation of two country accounts.
The work my partner Bruce Zagaris, an international financial compliance expert, has been performing for various ambassadors and countries relates to de-risking. Today, the World Bank is having a special meeting with small countries because United States, Canadian and European banks are closing many of their correspondent banks with indigenous banks in the Caribbean.
Simultaneously, French banks are considering de-risking some of their U.S. correspondent accounts because of the disproportionate fines and convictions resulting from sanctions violations.
Hence, banks and missions are faced with a very fluid situation, and most banks are shedding risks, in part because on May 6, 2016, FinCEN issued new Customer Due Diligence final rules and in Sept. 2015 the Yates memo requires prosecutors and corporations to focus on criminal liability of executives. In addition, national and international politics move towards more criminal liability for banks and their executives, as also reflected in stump speeches of the leading Presidential candidates, or movies, such as Money Monster. Therefore, banks are having to develop more rigorous anti-money-laundering due diligence and, when they do, simultaneously re-evaluate the risk of new and current clients. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.
Thu, / Embassy Law Link