Congressional Democrats pen letter to financial regulators on “de-risking” and inclusion

Federal Issues Congress CFPB OCC

On May 15, 11 Congressional Democrats sent a letter to Treasury Secretary Yellen, now-former FDIC Chairman Gruenberg, Acting Comptroller Hsu, Fed Chair Powell, FinCEN Director Gacki, NCUA Chair Harper, and CFPB Director Chopra asking for robust, modernized anti-money laundering (AML) and financial crimes compliance to support equitable banking access for Muslim Americans and immigrant communities. The congressmembers raised these concerns as banks increasingly engaged in the practice of “de-risking,” which involved indiscriminately terminating or restricting business relationships with broad categories of customers rather than managing risk consistent with risk-based supervisory or regulatory requirements. The letter highlighted that customers in the Muslim American, Middle Eastern, and South Asian American communities “may” be considered “high-risk” erroneously for sending payments or remittances abroad, or by donating to charities or religious institutions. The letter asserts that this practice can also harm economic stability and sustainability in countries that depend on remittances for development.

The Democrats proposed several changes to address these concerns. First, the letter asked financial regulators to issue a joint statement affirming financial inclusion as a priority. Second, it requested a formal advisory group on financial inclusion. Third, the letter requested FinCEN issue FAQs to help financial institutions “avoid shutting down or restricting accounts unnecessarily.” Fourth, the letter asked the Treasury to amend its annual examiner training to include a discussion on financial inclusion. Fifth, it asked for the promulgation of guidance for banks to provide pre-clearance mechanisms for consumers likely to raise AML flags. Finally, the letter requested that the CFPB establish notice and dispute resolution requirements for consumers who “experience account closures especially when a SAR is not filed.”