World banks must vet their customers for terrorism links as part of a global crackdown on money laundering and criminal finance.
Terrorist screening “should be carried out irrespective of the risk profile attributed to the customer,” the Basel Committee on Banking Supervision said in proposals published today. Lenders should immediately freeze any assets from clients that fail the test, according to the guidelines.
Regulators around the world have cracked down on money laundering after the 2008 financial crisis. The U.S. fined HSBC Holdings Plc (HSBA) $1.9 billion last year over claims the lender gave terrorists and drug cartels access to the U.S. financial system. Standard Chartered Plc also agreed to pay $667 million to U.S. regulators after they alleged the bank helped Iran launder $250 billion. The U.K. has fined three banks for failing to have effective anti-money laundering controls in place for high-risk customers.
I’m not sure why the banks weren’t already doing this, or what teeth Basel has to enforce this.