This may be something of an understatement, but it’s not been a good year for the banks, has it? First there was that little local difficulty with a global meltdown of the banking system, along with complete destruction of public trust in that system, and now some UK banks have been hauled over the coals for closing the accounts of a hundred people “from ethnic minorities” (the term used in the BBC story). Having been brought up in Singapore – the original melting-pot community, as diverse as all get out but united by a love of satay and gin-based sundowners – I loathe (and am completely mystified by) racial discrimination. But I nonetheless have some sympathy for financial institutions that are required by law to apply a risk-based approach to their AML activities (the report confirms that “banks say they are under an obligation to close accounts if they suspect money laundering”, suggesting that this is why the accounts were closed). So how to create a risk profile without race/nationality being part of that? All guidance on risk ranking suggests that jurisdiction is part of the equation – the jurisdiction where the money was made/invested/sent/withdrawn, the jurisdiction where the business was incorporated or operated, and the jurisdiction where the account holder was born/lived/worked/given a passport.
Where the article is confusing – and deliberately so, I suspect, in order to generate a headline – is in concatenating nationality and race. The examples given – of man from Pakistan and one from Zimbabwe – are talking about nationality, not ethnicity. And here, as lawyer Barry Vitou says quite rightly in the report, banks (and indeed other businesses in the AML regulated sector) are between a rock and a hard place: they are told repeatedly that they must maintain and apply a list of high risk jurisdictions (and I’d be astonished if Pakistan and Zimbabwe weren’t on that list today), and then told that it might be contravening equality legislation if they do so. According to the BBC report, Rushanara Ali, MP for Bethnal Green & Bow, says that any broad patterns showing discrimination should be investigated. But what is a risk-based approach if not the application of broad patterns of discrimination?