Reported by: Daniel Flatley

Brian Nelson, the Treasury undersecretary for terrorism and financial intelligence, will go to Seattle, San Francisco and San Diego this month to warn banks against overcompliance such as cutting people off from services over fears of running afoul of sanctions.

His push highlights a challenge the US faces with sanctions: Successive administrations have imposed them swiftly and sometimes without much clarity, expecting financial institutions to comply on their own. Banks that run afoul of sanctions can face heavy fines, so they often adopt extreme caution toward anyone who could be considered a sanctions risk.

While de-risking can stem from concerns about profitability, fear of sanctions exposure or confusion about complying with anti-money laundering rules, the intent of the effort is to ensure no one is cut out of the financial system because an institution preemptively excludes them instead of assessing their actual risks, according to a spokesperson for the Treasury Department.

Read full report: https://www.bloomberg.com/news/articles/2023-01-06/treasury-officials-warn-banks-against-sanctions-overcompliance?leadSource=uverify%20wall