WASHINGTON – WASHINGTON (AP) – The Treasury Department warns that state laws that restrict banks from considering environmental, social and governance factors can undermine efforts to combat money laundering and terrorist financing.
The Associated Press obtained a copy of the letter sent Thursday to lawmakers. The letter highlighted a law signed by Florida Governor Ron DeSantis in May, which states that it would be an “unsafe and unhealthy practice” for banks to consider non-financial factors when doing business. The letter concludes that “such laws create uncertainty and may inhibit” national security efforts.
Conservative Republicans like DeSantis sought block environmental and socially conscious standards for investment, stating that such initiatives can lead to unfair discrimination based on political beliefs and harm legitimate businesses. They say that considering environmental, social and corporate governance issuesor ESG, before deciding whether investing is uncontrolled behavior.
Tennessee recently enacted a similar law, although it was not mentioned in the Treasury letter. State legislatures in Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana and South Dakota are also considering measures along these lines.
DeSantis said the law challenged by the Treasury Department would protect the access that conservative groups and the gun industry have to the financial sector, arguing that such organizations have sometimes had their accounts frozen or closed.
The Treasury Department letter said the Florida law could nevertheless undermine the work of federal agencies by increasing “the risk that international drug traffickers, transnational organized criminals, terrorists, and corrupt foreign officials will use the U.S. financial system to launder money, evade sanctions and threaten our national security.”
The Treasury Department letter was in response to a July 8 request from Rep. Josh Gottheimer, D-N.J., Rep. Blaine Luetkemeyer, R-Mo., and Rep. Brad Sherman, D-Calif.
Gottheimer said he was pleased that the Treasury Department shared his concerns.
“To all states considering similar laws, I urge you to think twice before putting America’s national security at risk,” the congressman said in a statement.
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