Battling Canada’s AML woes; Higher capital ratios pushed
Wall Street Journal
Trouble up north: Canadian banks are coming “under fire at home and abroad” for not doing enough to stop money laundering, and American authorities have “swooped in” to make arrests related to some suspicious transactions. The Financial Transactions and Reports Analysis Centre of Canada told lawmakers that “more than two-thirds of Canadian banks it examined had ‘significant levels’ of noncompliance with anti-money-laundering rules.” And when arrests are made, the nation isn’t winning judgments, with just 316 money laundering convictions between 2000 and 2016, the paper reports.
Stay strong: The Systemic Risk Council — a group of former government officials, executives and finance experts that includes Paul Volcker, Sheila Bair and Jean-Claude Trichet — is warning U.S. bank regulators against easing some bank capital ratios, a plan announced in April. The group said recent proposals from the Federal Reserve and the Office of the Comptroller of the Currency, if enacted, would cause “the equity in U.S. banks ... to fall materially.”
“Lowering effective equity requirements would be dangerous when markets and asset values are at a cyclical peak — the very moment when capital buffers should be the deepest,” the SRC said.
Pressure rising: Edward Bramson, the activist investor who owns a 5.4% stake in Barclays, is stepping up pressure on the bank to find a replacement for Chairman John McFarlane. McFarlane, who “has long been expected to retire in 2019,” told the bank’s shareholders in May he would leave only “when the time is right,” and “while some might wish so, you are not getting rid of me yet.”
“By listing the succession process and the mandate of the future chairman among his priorities, Mr. Bramson appears to be laying down a marker that, as one of the bank’s biggest shareholders, he wants to have a long-term impact on the bank’s strategy.”
Who needs it?: Credit card issuers are “scaling back or dropping” free perks like price protection and extended warranties, Yahoo Finance reports. The reason? “Few people use them. Bankrate found that a third of credit card holders never used any of the benefits their cards offer. That's a problem for the credit card issuers because benefit programs can be costly to administer.”
Moving out: HSBC, Europe’s biggest bank, said it is shifting ownership of more than half a dozen of its European country subsidiaries from London to its French unit, Reuters reports. “The move is aimed at ensuring HSBC can continue to serve its European customers ahead of Britain’s exit from the EU in March 2019, after which British-based firms are expected to lose so-called passporting rights that allow them to sell financial services in the bloc.”
“Canada must immediately take action in order to change the perception that it welcomes, or even encourages, corrupt behavior.” — Marc Tassé, head of the University of Ottawa’s anticorruption center, on alleged money laundering going on at Canada’s banks.