U.S. Sens. Tim Scott (R-SC) and Mike Rounds (R-SD) are seeking answers from the Federal Reserve Bank of New York on reports about faulty anti-money laundering controls on account relationships with the Central Bank of Iraq.
“According to the report and U.S. officials, ‘as much as 80 percent of the more than $250 million in dollar wire transfers flowing through them [the Iraqi banks] on some days were untraceable and some portion of that amount went secretly to Iran’s Islamic Revolutionary Guard Corps and the anti-U.S. militias it supports.’ If accurate, this would represent one of the single greatest failures of the U.S. financial regulatory regime,” Scott and Rounds wrote in an Oct. 2 letter to leaders of the Federal Reserve Bank of New York and the Board of Governors of the Federal Reserve System.
Scott is the ranking member on the U.S. Senate Banking Committee, while Rounds is a member of the committee.
The senators added, “… for over two decades, the NY Fed processed wire transfers and transactions originating from private banks in Iraq to various banks across the globe without conducting or requiring basic Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) ‘know your customer’ compliance. Reportedly, these transactions were facilitated without any disclosure of where the funds originated or the intended recipients—which if true, is astounding. As you know, if these actions were carried out by a commercial bank, the bank and its executives would likely be subject to severe civil and criminal penalties, including permanent closure.”
The senators are seeking detailed answers on the reporting and on steps the institutions are taking to address these issues.