Vir Cantium

I'm right, you know …

Fraser Nelson's Banking Experience

Fraser Nelson over at the Speccie has had an interesting experience with RBS:

Some tip-offs are so awful that you almost hope they are untrue. When I was told by Geoff Robbins, a computer consultant, that he had been asked about his political connections before opening an account with the state-controlled Royal Bank of Scotland it sounded fantastical.

Sadly, it seems, it was not fantastical. Fraser’s investigations revealed that indeed RBS are/were asking about political affiliations. The staff were blaming the Money Laundering Regulations. To be fair, the Money Laundering regs do require organisations, from banks to accountants and beyond, to ask some damn silly and pointless questions, but such is the nature of state regulation that the real targets of such measures often carry on as before, while the majority of the law-abiding are inconvenienced.

However, for a bank – a state owned bank in particular – to be asking about political sympathies is way out of order.

RBS’s response ran thus:

“As part of our implementation of FSA guidelines around Anti-Money Laundering activities, we introduced questions on Politically Exposed Persons as part of our account opening procedures. This has meant that staff in some instances have been asked to enquire about whether someone is a Politically Exposed Person. Unfortunately, they have asked the question of political affiliation instead. We have taken all necessary steps to ensure that our customers teams are aware of the difference and will change practices with immediate effect. This issue will also be highlighted in our ongoing staff training programmes on this important topic.”

Now in accountancy we also have to abide by the regulations. Many firms are regulated by their respective professional bodies, others by HM Revenue & Customs directly. For some enlightenment as to what a “politically exposed person” actually is, we can turn to HMRC’s guidance (pdf, 677kb, page 22), which would be near-identical to the FSA rules cited above:

7.12.3 Politically exposed persons (PEPs)
What is a PEP?
Under the definition in MLR 2007 Regulation 14(5), a politically exposed person is a person who:
• Is or has, at any time in the preceding year, been entrusted with a prominent public function by:
(i) a state other than the UK
(ii) a Community institution (e.g. the European Parliament), or
(iii) an international body (e.g. the U.N.) or
• Is an immediate family member or a ‘known close associate’ of such a person.
Prominent public functions include:
– Heads of state or government, ministers and deputy or assistant ministers
– Members of parliaments
– Members of supreme or constitutional courts, or other high level judicial bodies
– Members of courts of auditors or the board of central banks
– Ambassadors, charges d’affaires and high-ranking officers in the armed forces and
– Members of the administrative, management or supervisory bodies of State-owned enterprises.
An ‘immediate family member’ includes:
– A spouse or civil partner
– A partner
– Children and their spouses, or partners, and
– Parents.
A ‘known close associate’ includes:
– Any individual who is known to have joint ownership of a legal entity or legal arrangement, or any other close business relations, with a person referred to in the above bullet points and
– Any individual who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit of a person referred to in the above bullet points.
How can a PEP be identified?
Under Regulation 20 (2) businesses must have risk-sensitive policies and procedures in place that can identify when a customer with whom they propose to have a business relationship or carry out an occasional transaction (i.e. of 15,000 euro or more) is a PEP. Where there is a risk that such a customer may be a PEP, businesses should make appropriate enquiries by, for example, asking the customer for background information, researching publicly available information via the internet, or, if the risk is substantial, consulting a commercial website listing PEPs. If there is doubt about whether the customer is a PEP, the customer should be treated as high-risk.
In deciding whether a person is a known close associate of a PEP businesses need only have regard to information that they hold or is publicly known (Regulation 14(6)).

So that’s clear then. Well, at least, it’s clear it’s got nothing to do with how you vote. I suspect the rules are there to stop dodgy EU commissioners (perish the thought) or Mugabe’s friends trying to squirrel their ill-gotten gains away in a UK bank (as if, having gone to all that trouble, they’d put it in a shaky UK institution in an equally shaky currency).

But all this is to ignore the point of Fraser’s concern. That an organisation, especially a state-controlled one, should even think that asking (and thus, no doubt, recording) political sympathies is acceptable is, frankly, horrifying. For my part, that it arises out of a glitch in the bureaucracy might possibly make it even worse.

Update: Iain Dale and Dizzy, among others, have picked up on the story. Let’s see if the MSM follows.


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