U.S. banks push back on proposed rules that would stem flow of dirty money

American banks are opposing an international task force's attempt to increase accountability in account ownership -- and keep money clean -- according to a Wall Street Journal report by Deborah Ball and Cassell Bryan-Low.

The Financial Action Task Force (FATF) -- a branch of the Organisation for Economic Co-operation and Development, whose members from 34 countries promote globally sound economic policy standards -- is championing a measure that would force banks to "identify and take reasonable measures to verify the identity" of the individual who ultimately controls any account. U.S. banks, which typically allow accounts to be opened in the name of a trust, contend they alone should have discretion over mandating disclosure of beneficiaries and screening potential customers.

Reports the Wall Street Journal:

The International Banking Federation is resisting changes by the FATF. The trade group says toughening customer-disclosure standards wouldn't solve the problem unless governments include the real beneficiary of a trust or a legal entity in their corporate registries.

While the group includes banking-industry associations from around the world, people familiar with the matter said most of the opposition comes from U.S. banks, especially those with large trust operations.

Countries like Switzerland and the Caymen Islands, whose banking laws are more lenient than those in the U.S., are more typically thought of as places for money stashes of unnamed sources. But the Journal notes that the "U.S. has been under pressure from the international community on the issue of beneficial ownership" for some time, and a recent review cited in the report termed the anonymity a "vulnerability" in the system. U.S. banks argue that such due diligence is excessive and costly.

"It gets to the point where in order to open an account you'd have to hire a private investigator and do a full investigation," Robert Rowe, vice president and senior counsel for regulatory compliance at the American Bankers Association, told the paper. "Our position is that that kind of use of resources doesn't make sense."

(Still from "It's A Wonderful Life" via: AP)