ICT Views


AML – dealing with rejection

by: (Associate Director, Research and Development) on

In August I blogged about Banks declining customers, based on an article I’d seen where a number of firms had decide that Diplomatic and Consulate staff were no longer in keeping with their risk profile. This suggests that they planned to mitigate their ML risk by restricting their customer base.

Not unreasonable you might think if you are the firm but considerably more unreasonable if you are the customer.

Not just the Diplomats

Today’s blog is a continuation of this theme.

Over the weekend, it was reported by the BBC that more than 100 people from ethnic minorities have had their UK bank accounts closed without explanation.

The report says that the customer’s names were “not typically British”.

As you would imagine, both the banks themselves and the British Bankers Association (BBA) have been quick to refute any allegations of discrimination – pointing out that they operate entirely in line with their obligations.

Anyone for limbo?

But might that be the problem?

The Bank feels that, for whatever reason, in order to appropriately manage its risk exposure it needs to exit the relationship.

The clear inference from the article is that the firms involved must suspect money laundering is taking place. To be fair, it’s more than an inference. The quote from the BBA is: “there are certain communities that are being targeted by criminals to help facilitate money laundering”.

This of course changes the game, leaving both the Bank and the customer in limbo.

Speak no evil, hear no evil

Let’s resurrect Dave Bank from the last blog. I can say with 100% certainty that no customers are exited from the relationships on the grounds of race, ethnicity or so forth. In fact, for sake of argument, let’s examine the case of Mr Smith (very British sounding), a Dave Bank customer of five years.

During ongoing reviews of Mr Smith’s accounts, Dave Bank determines that the number of cash transactions being undertaken is suspicious, particularly the payments being made to and from jurisdictions considered ‘high risk’ in terms of ML&TF.

It is out of character with the usual pattern of transactions expected for the relationship and Dave Bank concludes action needs to be taken.

Dave Bank follows their ML reporting requirements, but also decides to terminate the relationship with Mr Smith, thus mitigating their future exposure to ML risk. Mr Smith gets what appears to be a very generic letter from Dave Bank, simply telling him that his account(s) have been discontinued. No explanation why.

But there really is nothing else Dave Bank can do.

Dave Bank can’t tell Mr Smith why they have decided to end the relationship for fear of indicating to Mr Smith they suspect him of money laundering. So Mr Smith won’t get the proper answer he wants. Hence the ‘speak no evil, hear no evil’ header used above.

For better or worse, that’s the way it is.

The Bank can’t say, so the customer is left in the dark.

Final thought

The cynical amongst you would perhaps consider that this does of course also provide a perfect excuse for any firm operating at a level of inclusiveness less than that demonstrated by Dave Bank to effectively get rid of a customer without providing a reason, hiding behind the ML requirements.

The only way to know (I imagine) would be to somehow track and investigate the number of SARs submitted by the firm; and then for this information to be made available for examination. Which seems unlikely.

Either way, again we end up at the same end point of my previous blog – inclusion versus integrity.

I really hope that the BBA are right and that there is no broader ‘risk group’ in operation here, based purely on ‘non-British’ sounding names. Where would it end?

If it ever arises that sideburns are deemed suspicious and my accounts are mysteriously closed, I’ll get back to you.

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