U.S. Congressional Subcommittee Recommends Strengthening Due Diligence on Correspondent Banking

On February 5, 2001, the Minority Staff of the Permanent Subcommittee on Investigations released a report, recommending the executive and legislative branches require banks to strengthen due diligence with respect to international correspondent banking. The report concludes that many banks in the U.S. have established correspondent relationships with the types of high risk foreign banks: (a) shell banks with no physical presence in country for conducting business with their clients; (b) offshore banks with licenses limited to transacting business with persons outside the licensing jurisdiction; or (c) banks licensed and regulated by jurisdictions with insufficient anti-money laundering controls that invite banking abuses and criminal misconduct…[more]