Financial System at Risk: Proposed Special Measure to Block Terrorist-Financing Bank
US Financial Crimes Enforcement Network (FinCEN) Proposes Measures to Prohibit Engagement with Al-Huda Bank
Washington D.C. - The US Financial Crimes Enforcement Network (FinCEN) has proposed a special measure to prohibit financial institutions from engaging with Al-Huda Bank, accused of facilitating the financing of designated terrorist organizations.
Background
According to FinCEN, Al-Huda Bank has been found to be a primary money laundering concern, particularly in regards to its misuse of the dollar auction system to finance terrorism. The bank’s access to US dollars through the Central Bank of Iraq (CBI) dollar auction has enabled it to facilitate illegal transactions with foreign financial institutions that maintain correspondent accounts in the United States.
Proposed Special Measure
The proposed special measure, authorized under Section 311 of the USA PATRIOT Act, would prohibit covered financial institutions from opening or maintaining correspondent accounts or payable-through accounts with Al-Huda Bank. This move aims to mitigate the risks posed by the bank’s illicit activities and prevent it from continuing to facilitate terrorist financing.
Consultation and Assessment
FinCEN consulted with various government agencies, including the Federal Reserve System, Office of the Comptroller of the Currency, and Department of State, before proposing this special measure. The agency assessed that none of the other available special measures would effectively address the risks posed by Al-Huda Bank.
Key Factors
In justifying the proposed prohibition, FinCEN highlighted several key factors:
- Lack of similar action: None of the other nations or multilateral groups have taken similar action against Al-Huda Bank.
- Minimal competitive disadvantage: US financial institutions would not be significantly disadvantaged by this measure.
- Limited impact on international payment system: The proposed special measure would not disrupt the international payment, clearance, and settlement system.
Impact
The move is seen as a significant step towards disrupting terrorist financing networks and upholding US national security and foreign policy interests. FinCEN believes that the proposed special measure would raise awareness of the ways in which illicit actors exploit weaknesses in vulnerable jurisdictions to circumvent sanctions and finance terrorism.
Public Comment Period
The public comment period for the proposed special measure will remain open until [date]. Following the comments, FinCEN will finalize its decision on the implementation of this measure.