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Yellen to Congress: US Anti–Money Laundering Policies Hurt the Poor

Rich countries’ anti-money laundering rules are “causing a great deal of hardship” by making it very costly for migrants to send money home. So testified Federal Reserve Chair Janet Yellen before lawmakers on the House Financial Services Committee in Washington this week. It’s a problem a CGD Working Group is looking at right now: the de-banking of remittance organizations by many banks that cite burdensome compliance requirements.

The Unintended Consequences of Anti–Money Laundering Policies

De-banking is an ugly word, but it’s the focus of a new working group launched by CGD in Europe. Banks in rich countries, under pressure from anti–money laundering and counterterrorism enforcement efforts, are increasingly “de-banking” money transfer organizations that operate in poor countries. In other words, to prevent criminals transferring their ill-gotten gains around the world electronically, they are denying banking services to legitimate companies that are a vital route for millions of people and businesses. And we are talking huge sums of money. 

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