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Axel von Schubert (who works in the regulated sector): he talks of a bank refusing to open an account because of an out-of-date utility bill, and of a flotation being delayed (sorry, “dangerously delayed”) because a lawyer wouldn’t sign the paperwork until he had seen evidence of the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.

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4 Responses to Muzzle those compliance watchdogs

  1. David says:

    “compliance rules are not being enforced and KYC tests are not being imposed” – he’s obviously never visited my firm! That did make me smile. Is he living in the 1980s still?

    • Dear David
      Welcome to the blog, and thank you for your comment.
      Yes, I suspect he may be a little out of touch with “the islands” – his use of the term KYC rather than the now more widely used (and widely reaching) CDD suggests a lack of familiarity with modern legal requirements in this area. Perhaps the firms he uses are misinterpreting the requirements – the banks he uses are asking for too much, and the offshore providers too little.
      Best wishes from Susan

  2. Robert James Long says:

    Just returned form holiday in the Baliwick of Jersey. Did not feel like Alice myself but there you go!

    The evening standard sees itself as very pro-city and pro-business so it is forever publishing articles about how X stops investors making money. I am not sure how many readers knowing this take it seriously. This whole “Why don’t you target real cirminals.” whine certianly falls flat with me!

    Having read the article I would not trust the author with my savings if he can’t understand why these checks are not important!

  3. You and I are certainly singing from the same hymn sheet, Robert! I think this fellow’s approach is very old-fashioned and blinkered, but then I would, wouldn’t I?
    Best wishes from Susan

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