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The Economist explains: The unintended effects of rules aimed at stopping financial crimes

MANY international banks have pulled in their horns since the global financial crisis, lending less and shedding customers. One reason for this is that strict new rules on capital and liquidity introduced after the crisis have tilted the cost-benefit balance away from banks’ least-profitable clients. Another cause is “de-risking”: banks drop customers in places or sectors deemed to pose a high risk of money-laundering, the evasion of sanctions or the financing of terrorism. Financial institutions and non-governmental organisations serving poor countries have been hit particularly hard by the withdrawal. The result is that one set of international policy goals, designed to choke off flows of dirty money, is undermining another, equally important set of goals, designed to foster development through increased remittances, financial inclusion and support for fragile states.The roots of the problem lie in the go-go years before the crisis, when banks grew careless about dirty money. BNP Paribas helped sanctions-busters, for instance, while HSBC channelled Mexican drug takings. The crisis made regulators less forgiving of such financial sins. Their crackdown coincided with a much harsher stance on the financing of terrorism. Fines for aiding financial crime have shot up over the past decade. These days, a single fine can be in the billions: in 2014 BNP Paribas stumped up …