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5/5/2020 Remarks by Assistant Secretary for Terrorist Financing Daniel L. Glaser at the U.S.-Gulf Correspondent Banking Private Sector Dialogue U.S. DEPARTMENT OF THE TREASURY Press Center Remarks by Assistant Secretary for Terrorist Financing Daniel L. Glaser at the U.S.Gulf Correspondent Banking Private Sector Dialogue 11/4/2015 As prepared for delivery NEW YORK – Good morning, everyone. Thank you to the New York Fed for this beautiful venue. And thank you all for allowing me to share a part of your morning, I know many of you have travelled long distances to discuss some very important topics over the next two days. The Treasury Department is committed to ensuring that the U.S. and global financial systems are connected, safe, efficient, and accessible to legitimate customers. This dialogue is one symbol of that commitment. It is wonderful to look around the room and see many familiar faces, our partners from the Gulf, whose presence here demonstrates the region’s commitment as well. I am pleased to see representatives from the private sector. Your knowledge and experience are essential in these conversations. The people around this table demonstrate the importance of the relationships between the countries of the Gulf and the United States. As governments, we cooperate and coordinate on a host of issues of mutual concern, from national and regional security to economic development and trade. Our solid relationships allow for important frank discussion and information sharing. Beyond our governments, our financial systems are deeply intertwined. The relationships between our financial institutions are essential to facilitating trade; providing access to financial services, including U.S. dollar financing; and fostering economic growth at the national, regional, and global levels. At the center of those relationships, of course, is correspondent banking, the issue that has brought us together today. All of you are strong partners, politically and commercially. We recognize the central role of the U.S. financial system in the global economy, and we recognize that open access depends on the connectivity of our financial institutions. I would like to stress that we take concerns related to correspondent banking seriously. Often, when this issue is raised, the term “de-risking” is used. We are all familiar with the term, but people often use the term in different ways, so I would like to begin today by making sure we are on the same page in our understanding. Essentially, de-risking is about risk management. We define de-risking as a situation in which a financial institution makes decisions to terminate, restrict, or deny services to broad classes of clients to avoid, rather than manage, risk. How banks assess and deal with risk is critical. Appropriate risk management occurs when a financial institution carefully assesses the risk associated with a particular customer and makes an informed judgment regarding its ability to mitigate or manage those risks. This is ultimately a commercial decision, one we expect our financial institutions to make on a nuanced, case-by-case basis. Over the past few years, many large banks—both in the United States and elsewhere—have reassessed their exposure to, and appetite for, risks related to conducting business with correspondent banks and money service businesses. This reassessment has been attributed to a number of distinct factors including profitability concerns, rising AML/CFT compliance costs and reputational risks. As a result of this reassessment of risk, correspondent banking relationships have been affected in some jurisdictions. Our ability to effectively deal with this issue depends on how accurately we understand it. And the conversations we are having on the topic—including today’s—have an important bearing on the issue of financial inclusion. To that end, Treasury is working with multiple international organizations, such as the World Bank, the Financial Action Task Force, and the Financial Stability Board to get greater clarity on the magnitude, breadth, and drivers of the problem, and the ability of financial institutions that have had accounts terminated to access other banking services. This effort is fairly advanced and we expect to have more data in the coming weeks. At the same time that we are improving our understanding of the issue, we are taking steps to address problems where they arise. And we want those steps to be actionable steps that each of us can take to advance the financial relationships between our countries, working as governments to support financial institutions as you identify and manage risk. There have been quiet calls in some circles for scaling back regulations and tamping down enforcement. We are not going to loosen laws or lower global standards, and we are not going to walk away from supervising our financial institutions or enforcing our laws. We have worked hard to keep up with trends in financial innovation and financial crimes and we will continue to do so. But we’re also not going to walk away from our commitment to an accessible, efficient, and transparent financial system. The key is to ensure that standards are well understood, applied, and enforced consistently across the globe. This is why today’s dialogue is so important. Around this table there are public and private sector stakeholders from each of our countries, focused on better understanding what needs to happen to maintain healthy financial relationships across our borders. This gathering is ideal for gaining a more nuanced understanding about what other governments expect of their financial institutions; how financial institutions implement policies and procedures to comply with those expectations; and what institutions, in turn, expect of each other. Clearer communication and understanding around these concepts will help bring about action where it is necessary and lead towards effective implementation of international standards across the globe. All of this is in service of enhanced cross-border correspondent relationships. This is no small task, and it requires the frank conversations I know you all are eager to have. So let me thank you all for your time and dedication to this issue. And know that the United States remains fully committed to maintaining the deep and strong relationships between our governments and our economies. https://www.treasury.gov/press-center/press-releases/Pages/jl0251.aspx 1/2 5/5/2020 Remarks by Assistant Secretary for Terrorist Financing Daniel L. Glaser at the U.S.-Gulf Correspondent Banking Private Sector Dialogue Thank you. ### https://www.treasury.gov/press-center/press-releases/Pages/jl0251.aspx 2/2
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