Lawmakers urge financial regulators to take action against banking discrimination

A group of Democratic lawmakers in the House and Senate are calling on the heads of the Treasury Department, the Federal Reserve Board and other financial regulators to ensure equitable banking access for Muslim Americans and immigrants

Sen. Elizabeth Warren (D-Mass.) and Rep. Ilhan Omar (D-Minn.) — in a letter sent Wednesday to Treasury Secretary Janet Yellen, Federal Reserve Board Chairman Jerome Powell and to other regulatory leaders – argued that anti-money laundering and financial crime prevention policies practiced across agencies could have a disproportionate impact on American Muslims.

These anti-money laundering practices are often known as “de-risking” and refer to when financial institutions terminate or limit business relationships with large groups of customers.

“The threat of risk reduction is especially strong for customers in the American Muslim community. Financial institutions may consider Muslims and Arabs, Middle Easterners, and South Asian Americans ‘high risk’, potentially erroneously, when sending payments or remittances abroad or donate to charitable or religious institutions,” the lawmakers wrote in the May 15 letter.

In a study last year by the Institute for Social Policy and Understanding, more than a quarter of American Muslims reported challenges banking, the highest number of any demographic group.

“Risk reduction can also undermine the stability and sustainability of countries that depend on remittances for economic development,” the lawmakers wrote, pointing to an article about how the risk reduction trend “harms” nations that depend on remittances. .

Other signatories to the letter include Sens. Ed Markey (D-Mass.), Bernie Sanders (I-Vt.), and Reps. Rashida Tlaib (D-Mich.), Katie Porter (D-Calif.) and Barbara Lee (D-Calif.) ), Alexandria Ocasio-Cortez (DN.Y.), Pramila Jayapal (D-Wash.), Joyce Marie Beatty (D-Ohio), and Jonathan Jackson (D-Ill.).

Lawmakers pointed to a New York Times report from last December about how hundreds of customers reported that large financial institutions closed their accounts without warning in an effort to prevent suspicious activity.

In applauding the Treasury Department for its risk reduction strategy, released in April last year, which outlined ways to prevent risk reduction, lawmakers argued that more could be done.

They proposed that federal agencies issue a joint statement stating how financial inclusion is a “public priority” for anti-money laundering policy and establish a formal national advisory group on financial inclusion that includes representatives from each agency.

Lawmakers also recommended issuing more specific guidance to banks on which situations merit account closure. They called on the Treasury Department to require financial institutions to have a process for customers to present evidence to show that a transaction is legitimate if they are concerned about flagging.

They also called on the Consumer Financial Protection Bureau to enforce statutes that ensure customers receive adequate notice and recourse when their accounts are unexpectedly closed.

In advertising In its risk reduction strategy last year, the Treasury Department said that risk reduction “undermines several important policy objectives of the U.S. government.”

“This strategy reflects the Biden-Harris Administration’s priority to shape a safer, more transparent, and more accessible financial system while maintaining a robust framework to protect the U.S. financial system from illicit actors and bolster national security,” Treasury said. Department said at the time.

Other recipients of the letter included Federal Deposit Insurance Corporation President Martin Gruenberg, Crime Enforcement Network Director Andrea Gacki, National Credit Union Administration President Todd Harper, Consumer Financial Protection Bureau Director , Rohit Chopra, and Michael Hsu, the acting head of the Office of the Comptroller of the Currency.

The Hill has reached out to the respective agencies for comment.

Concerns about anti-Muslim incidents in the US have grown further amid the war between Israel and Hamas in Gaza, where more than 35,000 Palestinians have been killed, according to local health officials.

More than 8,000 anti-Muslim complaints were filed across the country last year, marking the highest total in the 30 years that the Council on American-Islamic Relations (CAIR) has tracked complaints.

CAIR received the highest number of complaints in the final three months of last year, shortly after the militant group Hamas launched a surprise incursion into Israel that left around 1,200 people dead.

This story originally appeared on thehill.com read the full story