U.S. banks, small and large, have been exiting the once-prestigious embassy business over concerns about complying with money laundering regulations. Servicing foreign embassies and diplomatic missions is a high-risk, low-reward proposition, bankers say.
In 2010 and 2011, banks including J.P. Morgan Chase & Co. and Citigroup Inc. began closing accounts. When the large banks retreated, some of the embassies moved accounts to smaller banks such as Congressional Bank, which has four branches, and WashingtonFirst Bankshares Inc., with 10 branches around Washington.
But as it turns out, offering banking services to an embassy isn’t any easier for small banks than it is for larger lenders. WashingtonFirst recently told several diplomatic missions that it planned to close their accounts by the end of April, according to embassy officials.
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