Democrats in Congress are calling on financial regulatory agencies to combat banking discrimination against Muslim Americans and immigrants.
Sen. Elizabeth Warren of Massachusetts and Rep. Ilhan Omar of Minnesota wrote a letter Wednesday to Treasury Secretary Janet Yellen, Federal Reserve Board Chairman Jerome Powell and five other regulatory group leaders, urging them to prevent de-risking, used by financial institutions to mitigate suspicious activity by closing accounts associated with people they deem a money problem.
“We write to ask your agencies to take robust action to modernize anti-money laundering and financial crimes compliance obligations to protect and promote equitable banking access for Muslim Americans and immigrant communities,” the lawmakers wrote. “While Congress can and should take action to expand financial inclusion, the Biden administration can also take executive action to prevent discriminatory account closures and restrictions.”
They wrote that the threat of de-risking practices is “especially stark” for Muslim Americans.
“Financial institutions may consider Muslim and Arab, Middle Eastern and South Asian Americans ‘high risk,’ potentially erroneously, when sending payments or remittances abroad or donating to charities or religious institutions,” they wrote. “De-risking can also undermine the stability and sustainability of countries that depend on remittances for economic development.”
The lawmakers said they wrote a similar letter in 2022 to express their concern over this issue, but the reports of de-risking have only increased since then. They cited a New York Times report from December that revealed hundreds of reports from customers getting their accounts shut down without warning.
They acknowledged that some “encouraging steps” have been taken to combat the issue, like the Treasury Department releasing a strategy on de-risking, but more could be done.
They gave six examples of proposals the regulatory groups should take, including issuing a joint statement that affirms that financial inclusion is a “public priority” for anti-money laundering policy, creating an advisory group on financial inclusion and creating guidelines for financial institutions to follow when they want to shut down an account.
They also called on the Treasury Department to change its examiner training to include financial inclusion discourse and for banks to provide banking customers with “pre-clearance mechanisms” for any transaction that might be flagged as a risk. They requested that the Consumer Financial Protection Bureau enforce giving customers notice when their accounts are shut down or flagged.
Sens. Ed. Markey, Massachusetts Democrat, and Bernard Sanders, Vermont independent, along with Democratic Reps. Rashida Tlaib of Michigan, Katie Porter of California, Barbara Lee of California, Alexandria Ocasio-Cortez of New York, Pramila Jayapal of Washington, Joyce Beatty of Ohio and Jonathan Jackson of Illinois, signed the letter as well.
The other groups the letter was addressed to were the Office of the Comptroller of the Currency, the Financial Crimes Enforcement Network, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the National Credit Union Administration.
The Federal Reserve Board said it received the letter and plans to respond. The Consumer Financial Protection Bureau also said it received the letter and is reviewing it. The National Credit Union Administration declined to comment. An Office of the Comptroller of the Currency spokesperson said that OCC “does not comment on congressional correspondence.”
The Washington Times reached out to the other regulatory group leaders for comment.
• Mallory Wilson can be reached at mwilson@washingtontimes.com.
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