Muzzle those compliance watchdogs

I went on a Grand Day Out to London last week, and on my way home avoided catching up with emails by reading the (now free) Evening Standard.  My eye was caught, of course, by a story about compliance, because the headline said “Honest business hounded out of Britain by compliance watchdogs”, and the picture showed the arrest of Mexican drug lord Joaquin Guzman.  See for yourself.  Honest business, I wondered – El Chapo?

But no, the article wheeled out that old saw about the horror that is trying to move your money around in our modern world of “over-zealous compliance teams” and “excessively onerous disclosure burdens”.  Personally, I was thrilled to read the examples given by the writer Axel von Schubert (who works in the regulated sector): he talks of a bank refusing to open an account because of an out-of-date utility bill, and of a flotation being delayed (sorry, “dangerously delayed”) because a lawyer wouldn’t sign the paperwork until he had seen evidence of the address of one of the directors involved.  Thrilled, I tell you: that’s exactly what should be happening.  How can a company even think of floating on the stock market if it can’t, on demand and without “dangerous delay”, prove the identity of the main players?

But obviously Mr von Schubert and I are coming at things from entirely opposite directions, for his nirvana is a “commercially conducive” atmosphere for London.  And he’s patently using very different financial institutions to the ones I frequent: he says that to open a simple bank account these days you have to fill in “50-plus page application and account-opening forms” and supply “countless due diligence documents”.  I did open a bank account last month, at a new bank that did not know me from Adam, and I filled in a three-page form and supplied two documents.  And just in case my readers in Guernsey, Jersey and elsewhere are feeling a bit smug right now, this chap doesn’t like you much either – you’re the “Alice in Wonderland offshore world” where “compliance rules are not being enforced and KYC tests are not being imposed”.

It is sad to see someone with influence – I should imagine the Evening Standard has a large readership – lambasting the current regime without suggesting a credible alternative.  He may feel that “this rampant red tape is actually missing its target”, but how can this (if indeed it is the case – he mentions the recent AML findings against HSBC and Standard Bank) be rectified?  Mr von Schubert seems to suggest that we should concentrate on “big banks, oligarchs, arms dealers and tycoons” and leave “the hardworking businessman or investor” alone.  But how to tell the difference?  Without doing due diligence on the hardworking businessman, how can we tell that he isn’t a (perhaps unwitting) frontman for an oligarch or arms dealer?  I’m just thankful I’m not Mr von Schubert’s MLRO.