For several years, banks have been bludgeoned with anti-money laundering (AML) and sanctions penalties. These twin hammers, increasingly wielded simultaneously and synergistically by regulators and prosecutors, have produced multi-billion dollar penalties. The Treasury Department now has released a message seemingly intended to provide some comfort to the bruised and wary banking community. But that comfort seems pretty cold.

Treasury’s August 30 statement is focused on risks arising from correspondent banking relationships. These relationships provide many foreign financial institutions with access to the U.S. financial system and the ability to access and trade in U.S. dollars. Many of the most severe AML/sanctions penalties have been imposed on foreign institutions for helping their customers, specifically those customers subject to U.S. sanctions, evade those sanctions by using correspondent relationships to provide concealed access to the U.S. financial system.

In response to severe penalties, many U.S. and foreign banks have shunned potential customers when there is even a whiff of risk that the customer may be linked to a sanctioned or otherwise undesirable person. This “de-risking” phenomenon – perhaps a natural outgrowth of complex AML/sanctions rules and draconian penalties – has been a source of consternation among both banks and the government agencies that regulate them. Bank avoidance of “undue risk” is an intended effect of the penalties, of course. But there is a consensus that denial of banking services to people who’ve done nothing wrong also is to be avoided, just like harm to puppies is to be avoided.

Treasury’s statement seems like an effort to prevent banks from going overboard on de-risking and putting puppies in harm’s way. It says that the heavy AML/sanctions penalties generally have been imposed for a “sustained pattern of serious violations on the part of depository institutions.” Further, these cases have “generally involved intentional evasion of U.S. sanctions over a period of years and/or the failure of the institutions’ officers and/or senior management to respond to warning signs that their actions were illegal.” Unless the improper actions are pretty egregious, Treasury seems to say to the banking community, “we’re not going to come down on you like a ton of bricks.”

But banks reading the statement closely may experience a bit of whiplash. Because the same statement reminds banks that they may be obligated to consider not only the record and activities of the foreign banks with which they may establish correspondent relationships, but also the activities of the foreign bank’s customers: it may be required, in circumstances that are not specified, “to request additional information concerning the activity underlying [a foreign financial institution’s] transactions.” That’s a hefty dose of due diligence that might be required in undefined circumstances.

It’s not surprising that Treasury’s comfort message is served cold like this – after all, Treasury hardly could say “we’ll ignore violations unless you act really egregiously.” But banks hardly can be faulted for continuing de-risking activity, even if it unintentionally harms some puppies.