U.S. regulator will recommend banks consider effects before de-risking

(Reuters) - A U.S. regulator said on Wednesday it would provide banks with more clarity on how to comply with anti-money laundering rules without simply shutting down relationships in riskier parts of the world.

The U.S. Office of the Comptroller of the Currency, which regulates large banks, will offer guidance on how banks evaluate foreign banking risks and make decisions on whether to shut down accounts, agency head Thomas Curry said.

The new guidance will include a recommendation that executives consider the negative effect of cutting off an entire group of customers, or an entire region from banking.

"The global financial system cannot be paralyzed by risk," Curry said at a Las Vegas conference for anti-money laundering specialists.

U.S. officials are increasingly concerned that heightened money laundering enforcement has pushed banks to withdraw from regions facing terrorism and drug trafficking.

That policy known as "de-risking" could "lead to entire regions being cut off from the positive effects of modern financial systems and broader financial inclusion," Curry said. "This is not the solution."

Banking executives have complained that regulators are intentionally ambiguous on how much due diligence is required to vet customers in regions seen as riskier. In the absence of that clarity, executives say they must err on the side of caution and shut down lines of business and accounts that pose questions.

(Reporting by Joel Schectman in Washington, Editing by Soyoung Kim and Andrea Ricci)