Two of America's largest banks have admitted they had failed to pay enough attention to accounts of some foreign counterparts linked by a US Senate inquest into money laundering, fraud and tax evasion.
But executives of Bank of America and Chase Manhattan Bank told a hearing of the US Senate Permanent Subcommittee on Investigations they had since taken major steps to improve their handling of so-called correspondent accounts.
The panel's Democratic staff said in a report last month that such accounts - which let foreign banks use US banks' services such as wire transfers and check clearing - were a "significant gateway" for money launderers to move hot money through the US financial system.
The report criticised major US banks, including Bank of America, Chase, Citibank and Bank of New York, for being too quick to open accounts for shadowy offshore banks, too lax in monitoring them and too slow to close them down when problems emerged.
"US banks are the gatekeepers through which foreign banks and their clients have to pass to get access to the US banking system," said Senator Carl Levin, the subcommittee's highest ranking Democrat.
"When it comes to high-risk foreign banks, US banks have not lived up to their gatekeeping role." he added.
Citibank was faulted by committee investigators for its dealings with two "shell" banks linked to Argentine financial groups. The report has sparked a political scandal in the country which threatens the job of its central bank president.