Another big bank CEO says that claims about politically motivated “debanking” are unfounded.
In a speech before the Economic Club of Washington, D.C., Bank of America CEO Brian Moynihan said that it is over-regulation of banks, and not political bias, that is causing customers to be barred from the banking system.
“We bank everybody. The real question was about over-regulation frankly,” said Moynihan, whose comments Tuesday (Feb. 25) were reported by Bloomberg News.
President Donald Trump publicly chastised the CEO at the World Economic Forum in Davos, Switzerland last month, accusing Bank of America of limiting business with certain clients.
“I hope you start opening your bank to conservatives, because many conservatives complain that the banks are not allowing them to do business with the bank, and that included a place called Bank of America,” the president said.
Trump also rebuked JPMorgan Chase CEO Jamie Dimon, alleging the same treatment of conservative customers by his bank.
Both banks, the report adds, have said they do not restrict customers based on their politics.
“If you look at what has happened, it’s because interpretations of anti-money-laundering, the Bank Secrecy Act, KYC — know your customers,” Moynihan said. “There is a lot of burden upon the banking system to both report suspicious activity and do a lot of analysis.”
Banks, the Bloomberg report adds, have been criticized for shutting down customer accounts for unknown reasons. The law also requires them to report suspicious activity to regulators as a way to prevent money laundering.
“We have to close accounts, and we can’t tell people why we did it. And often we’re told by authorities to close accounts, that creates confusion,” Moynihan said Tuesday. “At the end of the day, it’s about getting these regulations right. I think it opens the dialog about how we get these regulations correct.”
Dimon made similar comments recently when he joined other CEOs for a roundtable on the “debanking” issue in Washington.
“The AML/Fincen rules are extraordinary, and it does cause a lot of people to be pushed out of the system because banks were afraid of being sued, fined, because if after the fact something goes wrong — coulda, woulda, shoulda — you could pay a billion dollars,” Dimon told reporters.
PYMNTS made the same argument after the debanking issue surfaced last year.
“At the heart of the issue is potentially the lack of a clear, comprehensive regulatory framework to address the unique risks posed by the FinTech and cryptocurrency industries,” that report said. “Financial institutions, tasked with navigating a labyrinth of overlapping and often contradictory rules themselves, can commonly be left with little incentive to take on high-risk clients when the compliance burden could outweigh any potential gains.”
