Szubin: Risks Should be Managed, Not Avoided Altogether

Speaking at the ABA/ABA Money Laundering Enforcement Conference today, Acting Treasury Undersecretary Adam Szubin stressed the importance of healthy correspondent banking relationships, cautioning banks against “derisking,” or avoiding regulatory risk by terminating, restricting or denying services to a broad class of clients.

“We hear that derisking is pushing people out of the regulated financial system, preventing countries from accessing the dollar, depressing global trade flows or straining global development,” Szubin said. He added that the Treasury is working closely with the World Bank, Financial Stability Board and other global financial regulators to gather data on derisking in an effort to establish financial and regulatory policy.

Szubin acknowledged that AML/CFT standards are often invoked as negative drivers for derisking, but stressed that the current standards would not be rolled back or diluted. “We require institutions to be vigilant as they identify potential risks,” Szubin said, “and to design and implement effective AML/CFT programs that assess and address those risks.”