November 20, 2010 / 1:43 AM / 9 years ago

Banks cut back on trading with embassies: report

NEW YORK (Reuters) - Some U.S. banks are cutting back their dealings with embassies and other foreign institutions in the United States because of the difficulty of complying with money-laundering rules, the Wall Street Journal reported.

Banks have been under pressure to comply with money laundering rules implemented after the September 11 attacks that require them to track the source and purpose of transactions, according to the newspaper.

The U.S. State Department told the Journal that the banks’ actions have affected about 40 countries, of which 16 are African.

JPMorgan Chase & Co (JPM.N) told ambassadors in letters dated September 30 that it is closing its division serving diplomatic and foreign government entities, the newspaper reported.

Citigroup Inc (C.N) is also considering cutting some business with embassies, and Bank of America Corp (BAC.N) and HSBC Holdings (HSBA.L) have already done this, the Wall Street Journal reported.

Officials at JPMorgan, Bank of America, Citi and HSBC were not immediately available to comment.

The State Department has been in contact with the banks involved, a spokesman said in an email, adding “we cannot require them to hold or maintain any account or client.”

“We have already been in contact with some of the affected missions and are examining options for the provision of banking services,” he added in the email.

The State Department also plans to hold a briefing by banking regulators for all chiefs of missions to help them better understand the current regulatory and business environment for U.S. banks, the email said.

Reporting by Elinor Comlay; Editing by Gary Hill

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