US banks to close foreign diplomatic mission accounts

[sonicboom]

US banks to close foreign diplomatic mission accounts


JP Morgan Chase is one of several banks that will be closing diplomatic accounts Foreign diplomats have complained to the US government about the decision of several US banks to end services for diplomatic missions.

The diplomats of several countries said they were actively searching for new banks but were having little success.

Federal officials heard the concerns of roughly 150 envoys during a closed-door briefing on Thursday at the United Nations in New York City.

Some diplomats said the UN budget could be affected by the account closures.

The Wall Street Journal newspaper suggested in November that the banks' decisions were prompted by difficulties in adhering to federal money-laundering regulations affecting international transfers.

Regulations have been tightened since 9/11 in an effort to stop the flow of illegal foreign funds for crimes like financing terrorist acts.

'Big concern'

Speaking after the briefing, state department official Patrick Kennedy told reporters the missions had been given advice on "alternative approaches" they could take to obtain banking services.

He stressed that the banks' decisions were based on commercial reasons and "not because the bank is saying that the embassy of Xanadu or the mission of Shangri-La is engaged in some nefarious activity".

The US would continue its work with both diplomats and the banking industry, he added.

JP Morgan Chase, which handles many diplomatic accounts, did not specify a reason for terminating the services.

But reports suggest it may be because monitoring the accounts has become too costly.

In a letter dated 30 September, the bank told its diplomatic clients it had "made the decision to close its division that serves diplomatic and foreign government entities" and that its decision was not a reflection on how the envoys handled their accounts.

The closures at JP Morgan are scheduled to come into effect on 31 March and will affect mission accounts but not those of individual diplomats.

The BBC's Barbara Plett at the United Nations says this is a big concern for diplomats, with at least six telling reporters they had not yet been able to find another bank for their mission, even though they have been shopping around.

If they fail to do so by the end-of-March deadline, they will have trouble paying their employees and bills, our correspondent adds.


BBC News - US banks to close foreign diplomatic mission accounts