Time running out for banks to abide by anti-money laundering rules
Even the merest glance at the financial pages of the press will show that the banking sector is under pressure for a variety of reasons. After many of the UK’s leading banks had been bailed out by the Treasury in order prevent them from collapsing, they and the rest are being forced to play by the rules in order to restore their image and reassure fed-up customers.
One problem which hasn’t gone away is money laundering. In the past couple of years, some of the UK’s biggest banking firms were controversially found to have housed accounts used for money from terrorist groups and drug gangs, something which the government managed to pick up on. As a result, more than £1.3bn in fine were paid last year, but there seems to be no end in sight.
The Financial Conduct Authority (FCA) stated that of the 17 banks which they said were due for a review by the regulator, more than half still hadn’t managed to put in place measures against money laundering. Somewhat more alarmingly, the FCA apparently found that some trades financed by some of the country’s main banks were used with “fresh air”.
Four of the lead offenders were based in the UK, which suggests that rules currently in place against money laundering are either insufficient or even non-existent. If this is the case, then rules look likely to be tightened a little more, giving banks susceptible to being used for money laundering little time to comply.
Since 2007, many within the banking sector have been vilified by the public, especially those holding accounts with the companies affected the most by bailouts, money laundering and the Libor scandal. The news that little is being done to stop drug gangs and the like from being accepted as customers or even from receiving money from banks is unnerving for many ordinary customers.
Customers with regular saving accounts may have reason to feel aggrieved, especially if they feel that they’re getting treated worse than those who engage in criminal activity and deposit their ill-gotten with the same bank. The threat of being taken to court may act as a deterrent for banks continually not doing things by the book, but nothing has materialised yet.
Further tightening of rules when it comes to vetting customers, taking money from unsavoury groups and individuals and doing deals with such people among other things should take place. In the meantime, banks taking steps to change the way in which they work will be encouraged to speed up any reforms.
However, such changes may prove extremely difficult for a variety of reasons. Many of the biggest banks in the UK will have at least one branch in major and minor towns and cities throughout the country, and will also have thousands of members of staff to inform. Reform will likely be a long, drawn-out process.