US Treasury Department Announces New De-Risking Strategy for Financial Institutions in 2023.

The U.S. Department of Treasury Unveils Bold De-Risking Strategy 2023

Find out how the 2023 De-Risking Strategy impacts your finances! The US Department of Treasury issued the new De-Risking Strategy for 2023. Congress mandates it upon the Anti-Money Laundering Act of 2020. A new and improved strategy works by examining the causes of risk posed to financial institutions, addressing the de-risking, and identifying the most impacted ones. The main benefit of this strategy is the policy to combat threats provided by the Treasury Department itself.

What is De-Risking?

According to the US State Department De-risking is a phenomenon that occurs when Financial Institutions deliberately, fairly, and equally terminate or restrict business relationships instead of managing the customer’s risks. It is done to avoid the risk mitigation cost and hassle. The new De-risking Strategy mirrors the Administrative priority of Joe Biden and Kamala Harris. It shapes safer, transparent, and easily accessible financial systems alongside maintaining a framework to protect the U.S Financial System from Money Laundering and Terrorism. Deputy Secretary, Wally Adeyemo stated upon announcement of the new De-Risking Strategy that, “The strategy represents the US Treasury’s strong commitment to combat de-risking and stresses the importance of risk management by financial institutions. By far, this strategy unveils the strongest measures that the Treasury Department has proposed on the subject of De-risking.” To issue this report, Treasury has researched, consulted, and engaged extensively with the general public and private sector. Banks, Money Service Businesses (MSBs), and other FIs whose link to the US financial system is strong. This has helped in understanding the root cause and negative impacts of De-Risking. It is important to note that De-Risking can impact financial institutions negatively Reputation of the FI is sometimes at stake. Moreover, the De-Risking Strategy of 2023 will help financial institutions to remove the loopholes linked to reputational damage, increased compliance cost, and other negatives in their existing as well as updated AML and KYC systems. Also Read: Identify High-Risk Customer Types and Prevent Your Business from Fraud 

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