Banks Blame Rules for Snarling New Borrowers’ Virus Loans (1)

U.S. banks, facing criticism for prioritizing existing customers over new ones who are seeking coronavirus rescue loans, put the blame on federal rules meant to catch terrorists and money launderers.

The lenders, who have been getting beaten up by small businesses and lawmakers alike, have urged a little-known agency charged with monitoring suspicious financial transactions for relief from the stringent regulations. But their requests have gone unheeded for now.

The issue is just one of a number of problems that have surfaced during the rollout of the $350 billion Small Business Administration lending program that began last week. If left ...