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Derisking Is Risky – by David G.W. Birch

David G.W. Birch

2024-01-09 13:30:13

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Article Summary:
The article discusses the recent issue of banks denying and closing certain accounts in response to financial regulations. The author argues that the focus should be on governments and regulators rather than the banks themselves. The core problem lies in the increasingly strict regulations around suspicious activity and financial crime, leading to widespread account closures and de-risking. As a result, the author proposes the concept of “Bank Pre” as a potential solution, and highlights the need for better digital identity infrastructure to address these challenges.

Key Themes

1. Regulatory Compliance:
The article discusses how banks’ account closure decisions are driven by strict financial regulations and filing requirements for activities like large cash transactions or wire transfers.

2. De-risking:
De-risking refers to banks’ practice of exiting or closing customer accounts to mitigate compliance-related risks, and is a key topic addressed by the article as a challenge organizations are facing.

3. Digital Identity:
The need for robust digital identity infrastructure is highlighted as a potential solution to the challenges of regulatory compliance and account de-risking faced by banks.

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