March 30, 2016
The carry-on bags in the luggage bin above seat 7G on a recent U.S. flight to Dubai contained thousands of bills—$20s, $50s and $100s, all neatly wrapped in rubber bands and plastic.
The cash was carried aboard by Abdi Warsame, a Somali immigrant and an employee of a Midwestern money-transfer company that was shut out of the international banking system last year. The firm now ferries cash by hand.
The bills have since disappeared from the U.S. financial system. After arriving in Dubai, they entered an opaque network of trade, loans and remittances that fans across eastern Africa and the Middle East. U.S. banks have closed thousands of accounts held by people and organizations considered suspicious, high-risk or difficult to monitor—including money-transfer firms, foreign banks and nonprofits working abroad. Closing accounts for fear their customers may be up to no good evicts from the financial system the innocent as well as those the U.S. government would most like to watch, a consequence not anticipated by Washington. Since passage of the Patriot Act in 2001, enhanced reporting requirements have generated an extraordinary flow of data from banks and other financial institutions. The act and earlier laws have provided authorities millions of reports, including the names, addresses and Social Security numbers of people flagged secretly by banks for what employees and data-mining software interpret as suspect behavior. These U.S. banking requirements have global reach. Deutsche Bank AG co-chief executive John Cryan told a panel at the World Economic Forum in Davos in January that “very, very onerous” regulations have required banks to take on new roles. “We’ve been slow to recognize that we are an extension of law enforcement,” he said.
Some bankers say the monitoring is too broad, potentially undermining its effectiveness. Jaikumar Ramaswamy, a Bank of America Corp. compliance executive and former federal prosecutor, said, “I’m surprised at how much of my time is spent not focusing on the guilty but chasing the innocent.”