Recently, 20 state attorneys general (AGs) sent a letter addressed to U.S. Treasury Secretary Janet Yellen objecting to the Treasury’s recent letter which criticized state laws protecting individuals from de-banking. The AGs’ letter argued that these state laws, such as Florida’s HB 989, prohibited discrimination against consumers “based on factors that are not grounded in measurable risks” by financial service providers, and criticized the Treasury for allegedly misleading financial institutions about the implications of these laws. The AGs contend that the Treasury has incorporated political activism into financial regulation, citing past actions related to climate change and net-zero recommendations. The letter concluded by urging the Treasury to focus on its statutory duties rather than political agendas.
For its part, the Treasury sent a letter to House representatives regarding their concerns that the state laws, such as Florida’s HB 989, could conflict with federal AML and illicit financing laws. According to the July 18 letter, the Treasury shares concerns that the recent state laws could hinder financial institutions’ compliance with national security requirements. The letter states that such laws restrict the factors banks can consider when assessing risks, potentially undermining AML, countering the financing of terrorism, and sanctions compliance programs. The Treasury argues that such restrictions could prevent banks from effectively identifying and managing risks associated with illicit activities, thereby threatening national security. The letter calls for collaboration with states to address these issues while ensuring compliance with federal regulations.
