The decision of JPMorgan Chase & Co. and several other banks to close accounts of foreign embassies and United Nations missions is creating a cash-flow pinch for diplomats in the U.S. with bills to pay and payrolls to meet.
“It is a problem,” South Africa’s Ambassador Baso Sangqu said. “We cannot get banking services. We are shopping around.”
New York-based JPMorgan, the second biggest U.S. bank by assets, notified foreign governments in a Sept. 30 letter that their accounts would be closed on March 31. The letter didn’t give a reason for the decision and JPMorgan Chase spokesman Tom Kelly declined to comment.
Other diplomats said they haven’t been able to find banks that will accept their accounts and that they might face difficulty paying their staffs in New York and Washington and fulfilling such obligations as contributions to the UN peacekeeping and operational budgets.
“We can’t find another bank,” Egypt’s Ambassador Maged Abdelaziz said. “They say they don’t have any space.”
Abdelaziz said he understood that U.S. government requirements that JPMorgan and other banks monitor foreign accounts for money laundering or transactions that could be linked to terrorist groups made those parts of their business too costly. He said the banks feel “overburdened” by the requirement of submitting reports to the government.
U.S. National Interest
The banks’ decisions pose “very real questions and very real concerns,” Under Secretary of State Patrick Kennedy told reporters after meeting with envoys of more than 100 nations. “The State and Treasury departments have been in communication with the banking industry. We made it clear there was a U.S. national interest in working with embassies in Washington and missions to the UN in New York.”
Kennedy said Secretary of State Hillary Clinton and Treasury Secretary Timothy F. Geithner were working with the U.S. banking industry to resolve the problem. Mark Poncy, the Treasury Department’s director of the office of strategic policy, also briefed the diplomats and answered their questions in a two-hour meeting.
Kennedy said a “handful” of banks had made the decision to end the diplomatic accounts for “business reasons” that he wouldn’t specify, and that a “significant” amount of money was involved. He declined to identify the banks and said the U.S. offered suggestions to the diplomats on how they could persuade other banks to accept their money.
“Banks in the U.S. are private entities,” Kennedy said. “They are government-regulated, but not government-directed.” Bankers take the position that “we have done our economic analysis and we are a for-profit organization,” he said.
Iran’s Ambassador Mohammad Khazaee said the banks’ decision threatens the “existence” of the UN. “It is almost everybody,” he said. “Missions cannot function.”
China’s Deputy Ambassador Wang Min said his government must look for another U.S. bank and doesn’t know what will happen.
Iran’s Khazaee said he suggested the UN take its money out of JPMorgan in retaliation for the move. JPMorgan had a branch in the UN headquarters complex before the renovation of the buildings began last year.
UN spokesman Farhan Haq said, while the organization’s own bank accounts with JPMorgan aren’t directly affected by the bank’s decision, their future relations are “up for discussion.”
© Copyright 2023 Bloomberg News. All rights reserved.