WASHINGTON — The Treasury Department is warning that state laws that restrict banks from considering environmental, social and governance factors could harm efforts to address money laundering and terrorism financing.
The Associated Press obtained a copy of the letter sent Thursday to lawmakers. The letter singled out a law signed by Florida Gov. Ron DeSantis in May that says it would be an “unsafe and unsound practice” for banks to consider nonfinancial factors when doing business. The letter concludes that “such laws create uncertainty and may inhibit” national security efforts.
Conservative Republicans such as DeSantis have sought to block environmental and socially conscious standards for investing, arguing that such initiatives can lead to unfair discrimination based on political beliefs and harm legitimate businesses. They say that considering environmental, social and corporate-governance issues, or ESG, before deciding whether to invest is “woke” behavior gone amok.
Tennessee recently enacted a similar law, although it was not mentioned in the Treasury letter. State legislatures in Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana and South Dakota are also considering measures along these same lines.
DeSantis has said the law being questioned by the Treasury Department would protect the access that conservative groups and the firearms industry have to the financial sector, arguing that such organizations have at times had their accounts frozen or closed.
The Treasury Department letter said that the Florida law could, however, undermine the work of federal agencies, heightening “the risk that international drug traffickers, transnational organized criminals, terrorists, and corrupt foreign officials will use the U.S. financial system to launder money, evade sanctions, and threaten our national security.”
The Treasury Department letter was a response to a July 8 request from Reps. Josh Gottheimer, D-N.J.; Blaine Luetkemeyer, R-Mo.; and Brad Sherman, D-Calif.
Gottheimer said he was pleased that the Treasury Department shared his concerns.
“To any states that are considering similar laws, I urge them to think twice before putting America’s national security at risk,” the congressman said in a statement.
Send questions/comments to the editors.
We invite you to add your comments. We encourage a thoughtful exchange of ideas and information on this website. By joining the conversation, you are agreeing to our commenting policy and terms of use. More information is found on our FAQs. You can modify your screen name here.
Comments are managed by our staff during regular business hours Monday through Friday as well as limited hours on Saturday and Sunday. Comments held for moderation outside of those hours may take longer to approve.
Join the Conversation
Please sign into your CentralMaine.com account to participate in conversations below. If you do not have an account, you can register or subscribe. Questions? Please see our FAQs.