Ineffective money-laundering rules under scrutiny in Javid’s bonfire of red tape
CUMBERSOME rules which cost customers and banks time and money but fail to stop money launderers and terrorists may be axed, the Business Secretary has said.
Sajid Javid is overseeing an assault on red tape in the finance sector. It follows a tightening in recent years of rules designed to stop the transfer of ill-gotten gains in the wake of scandals such as HSBC’s failure to stop laundering by Mexican drug dealers using its accounts.
However, the tighter rules have also harmed innocent customers. Some have found themselves cut off from bank accounts or payment services because they are associated with unstable countries such as Somalia, while oth- ers have had to pay fees to prove their identity to their bank or investment firm.
“We are committed to saving businesses a further £10bn in red tape to help create more jobs for working people, boost productivity and keep our economy growing,” said Mr Javid, a former financier with Deutsche Bank. “I want firms to come forward and tell us where regulation is unclear or its enforcement ineffective.”
The call for evidence from the Department for Busi- ness, Innovation and Skills is open until October 23.
Banks hope the threat of enormous fines will be reduced in instances where lenders can show they worked hard to prevent illegal activity.
Of particular concern are incoming rules on so-called “politically exposed persons”. While this traditionally covered politicians in countries with high levels of corruption, new EU rules could expand it to all UK politicians and their families.
“The son or daughter of an MP will initially have the same risk weighting as the governor of an oil rich province from an unstable emerging economy – the bank will have to treat them initially the same way, when they clearly pose different levels of risk,” said Chrisol Correia, director of global anti-money laundering at LexisNexis Risk Solutions.
It would extend to top civil servants, judges and members of the Armed Forces.
One problem for the Government is that the British authorities may not easily be able to adjust rules and guidelines which are set at a global or European level.