U.S. dollar role in sanctions, AML fight threatened by looming rival payments system

A looming erosion of U.S. dollar dominance in international payments threatens to cripple the worldwide reach of financial sanctions and anti-money laundering controls led by the United States and its allies. This would compel Western financial institutions to improve data and analysis about their customers to guard against tainted money, officials said.

"It's not if; it's when," retired Rear Adm. Chris Parry, a U.K.-based strategic forecaster, told a Thomson Reuters Financial & Risk conference in New York.

"Every financial institution needs a strategy to be developed now for the days that are coming when money will be thrown across the wall to you and you have no indication whatsoever of where it's come from and its provenance."

The importance of the U.S. dollar in international finance has given the United States powerful reach to exert foreign policy and fight crime through the payments system. Banks that violate U.S. controls and sanctions can be barred from clearing dollar transactions. What ...

SOURCE: COMPLIANCE PROFESSIONALS