The United States has been pressing Arab Banks to tighten their supervisory measures in order to control suspected money laundering activity and terrorist funding and most notably the financial activities of the Islamic State in Iraq and Syria (ISIS).
Wissam Fatouh, Secretary-General of the Union of Arab Banks (UAB), summed up some of the concerns of American banks that have correspondent relationships with Arab banks.
Fatouh stressed that some of the U.S. officials he met in New York and Washington considered ISIS to be the most dangerous terrorist group because it was able to finance itself.
“The U.S. side expressed concern that the financial and banking system may be exploited to smuggle this money and move it within our territories. They considered the financial crimes to be cross-border crimes that pose a threat to the region and to the economic, social and security fabrics,” Fatouh said.
He added that the American side had emphasized that the objectives should be unified: to keep the terrorist organizations away from banking and financial systems.
U.S. officials urged Arab bankers who attended a recent conference in New York to maintain measures to combat money laundering and terrorist funding, saying that the biggest challenge was to dry up the financial resources of ISIS.
In a news conference at the headquarters of the Union of Arab Banks in Beirut, the chairman of the World Union of Arab Bankers Joseph Torbey told reporters that that the purpose of the meetings taking place in New York and elsewhere was to work closely with U.S. correspondent banks to prevent terrorist funding.
Torbey also noted that some American correspondent banks had decided to terminate their services with some small- and medium-sized Arab banks, due to the high cost of the growing compliance requirements.
“This step would prevent these banks from being able to provide vital services to their societies at a time when the Arab region needs solidarity with its efforts to guarantee stability,” Torbey said.
But Torbey did not reveal the names of the U.S. banks that have decided to end their cooperation with some Arab lenders.
The conference in New York was held in middle of this month and was attended by senior U.S. officials from the Federal Reserve, Treasury and State Department.
Some bankers even proposed the creation of an Arab committee, internationally recognized by all international banks and working under the umbrella of the Union of Arab Banks.
The main purpose of the committee would be to investigate clients and provide accurate information about them.