Strategic Assessment

The banking industry has long decried overregulation, and in particular, its ineffectiveness. To a degree, the banks have been right, as shown most significantly by the increase in terrorist financing through traditional banking channels, despite regulations and lawsuits attempting to stop it. However, there are alternatives to lawsuits and regulations to force banks into compliance. The most potentially effective alternative mandates that rating agencies lower a bank’s rating for financing terrorism. This can work because rating agencies hold significant influence over banks. Therefore, forcing credit agencies to consider a bank’s OFAC violations and pending ATA lawsuits when calculating their rating is the preferred option for effectively stopping the financing of terror.