financialservices.house.gov

Cmte Financial Services (R)
Contact:


McHenry pushes for financial services hearings, Deutsche Bank records
By: Joe Mont, Compliance Week

Washington, Jan 25 -

While most of the focus concerning the House Financial Services Committee in recent weeks has been on the return of Democratic leadership, Rep. Patrick McHenry (R-N.C.) is doing his best to ensure his party’s perspective.

This week, the Republican leader of the Committee sent a letter to Chairwoman Maxine Waters (D-Calif.) requesting hearings in “critical areas that the committee should prioritize in the first months of the new Congress.”

McHenry detailed a dozen hearings he says are “vital to helping ensure the strength and stability of the U.S. financial system” and global competitiveness. Suggested topics include:

• Britain’s withdrawal from the European Union and its impacts on the U.S. economy and the international financial system. The hearing will examine the effects of Brexit on unilateral and multilateral agreements and its potential systemic risk.
• The Export-Import Bank and American global competitiveness, examining the role of the bank and its impacts on the global competitiveness of U.S. companies and U.S. job creation.
• Cyber-security in the financial sector, with an examination of its readiness. Discussions will include efforts by the government to protect digital consumer accounts and personal information against fraud, misuse, and unauthorized access.
• A hearing on China’s “debt trap” to examine Chinese resistance to transparent disclosure in its lending and discuss the implications of China’s financing decisions in terms of the International Monetary Fund (IMF), World Bank, and global systemic risk.
• Foreign investment and venture capital in today’s global economy. Subject matter includes an evaluation of how Treasury is implementing the Foreign Investment Risk Review Modernization Act of 2018 and the impact it is having on startup capital formation for small businesses.
• Reductions to the Federal Reserve’s balance sheet, specifically to examine potential strategies for unwinding crisis-era asset purchases “in a way that does not create volatility to our financial markets.”
• Modernization of the Bank Secrecy Act and anti-money laundering (BSA/AML) regulatory regime to investigate the duplicative nature of the current rules, highlight the need to modernize reporting systems in the digital era, and strengthen our ability to target criminal activity.
• A hearing on the Terrorism Risk Insurance Act to provide oversight of the existing program and understand the evolving private insurance market and build consensus in advance of the program’s expiration.
• The regulation of FinTech, specifically an examination of how U.S. financial regulators have launched offices of innovation and pilot programs intended to encourage innovation in financial services and evaluating the strengths and weaknesses of that current framework.
• The continued oversight of the Financial Accounting Standards Board and its current expected credit loss (CECL) accounting standard.

McHenry is also adding his voice to scrutiny of scandal-plagued Deutsche Bank.

On Thursday, he sent Deutsche Bank CEO Christian Sewing a letter that initiates yet another investigation into the bank’s anti-money laundering operations.

The letter details past “compliance deficiencies” within the bank’s system to prevent and detect illegal financial transactions as well as other “serious scandals related to money laundering.” This includes, McHenry wrote, one case where the bank leveraged its access to the U.S. banking system to move “approximately $236 billion of cash into the global financial system, much of it from potentially illicit activity in Russia.”

An internal review of the Danske Bank scandal connected Deutsche Bank to $150 billion worth of potentially suspicious transactions.

Deutsche Bank reportedly conducted at least two additional internal reviews regarding money laundering in 2018, both of which found the bank’s client screening processes are insufficient, McHenry wrote.

To help the Committee evaluate the bank’s efforts to address “vulnerabilities that allowed billions of dollars tied to criminal activities to move through the international banking system,” McHenry asked Deutsche Bank to provide documents relating to independent and internal reviews of its processes. An independent monitor’s findings have neither been provided to the Committee nor publicly released, he explained.

Files demanded by McHenry include documents referring or relating to the review by the independent monitor appointed pursuant to Deutsche Bank’s Consent Order of Jan. 30, 2017, and documents related to Deutsche Bank’s internal analysis of its processes to identify and vet customers, dated June 5, 2018, and July 9, 2018.

McHenry also wants “any other independent or internal reviews related to the Bank’s anti-terrorism or anti-money laundering practices.”