Correspondent Banking: A Gateway for Money Laundering

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309 pages
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The Senate Committee on Governmental Affairs' Permanent Subcommittee on Investigations published a Minority Staff report investigating correspondent bank accounts from high-risk foreign banks in the United States that facilitated criminal activity and money laundering in federal financial institutions. They found that the current financial system fails to adequately screen and monitor foreign banks as client as they rely on manual reviews of account activity. The Subcommittee attributed these failures to two major problems: a failure of U.S. banks to ask the extent to which foreign bank clients are allowing other foreign banks to use U.S. accounts and the distinction made in due diligence practices made between foreign banks that have few assets and no credit relationship vs foreign banks that seek or obtain credit from U.S. banks. Ultimately the Subcommittee determined that these abuses of correspondent bank accounts undermine the financial system and burdens U.S. taxpayers and consumers.
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