GAO Report Highlights Challenges to Banking Organizations Operating in High-Risk Countries

A report issued by the Government Accountability Office today highlighted the challenges that banks face in providing services to money transmitters and nonprofits that transfer funds to recipients in countries that present a high risk for money laundering or terrorist financing. The report was issued pursuant to Congress’ direction, in the National Defense Authorization Act for Fiscal Year 2021, to identify options to address these challenges.

The report described the “high costs” to banks of conducting the due diligence necessary to ensure funds distributed in high-risk countries are not used for illicit purposes and the “heightened” regulatory scrutiny that banks receive when banking higher-risk money transmitters and nonprofits. The report stated that “[o]ngoing communication” between banks and nonprofit customers is “crucial to improving transparency” on how banks make decisions to open or close these customers’ accounts.

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