How US policies to stop terrorist financing end up hurting innocent families abroad – Vox – Updated by Dylan Matthews on November 18, 2015, 1:00 p.m. ET

A Western Union receipt. Remittances are particularly in danger from derisking. Matt Cardy/Getty ImagesOne of the most significant, but least covered, parts of the war on terror has been the Treasury Department’s effort to shut down al-Qaeda and other jihadist groups’ access to financial institutions. It’s an attractive way of tackling the problem: Freezing accounts here isn’t as expensive as sending in troops or airstrikes, and no civilians get hurt.Except the second part might not be true. A report released last week by the Center for Global Development, authored by a working group chaired by visiting fellow Clay Lowery and senior fellow Vijaya Ramachandran, argues that laws meant to counteract money laundering and terrorism financing are encouraging broader “derisking,” in which Western banks cut off ties with financial institutions in the developing world so as to reduce the odds that they’ll run afoul of regulations. The result is that developing-world banks, money transfer organizations (which handle remittances), and nonprofit organizations are losing access to the financial system as a whole.That can have real human consequences. People in countries like Somalia or Nigeria who rely on remittances from relatives in rich countries like the US could see fewer transfers or higher fees. NGOs doing health programs or cash transfers could see programs scaled back due to lack of banking. Foreign investment in developing countries could decrease due to fewer big international banks dealing in those countries.

Source: How US policies to stop terrorist financing end up hurting innocent families abroad – Vox