NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, August 19, 2014

A federal trial in Brooklyn is focusing anew on illicit money flows. Until now, federal crackdowns have targeted European banks that laundered dirty money into dollars for drug cartels and for sanctioned countries, like Iran. The Brooklyn case involves a bank headquartered in Jordan, called Arab Bank, which plaintiffs say handled transactions for people or organizations it knew were linked to terrorist attacks from 2001 to 2004.

Opening arguments were last Thursday, but the case is already reverberating through the banking industry — and not in ways that would make the world a better place.

As The Times recently reported, bank lawyers say that developments in the case could reinforce an unfortunate trend: the departure of several banks from the business of arranging remittances for immigrant workers, on the ground that the legal risk of inadvertently handling dirty money has become too high.