De-risking is a hot topic at the moment, with people agonising over how to marry appropriate and proportionate due diligence with profit, and how to protect the financial sector from the baddies without putting it beyond the reach of ordinary (perhaps less profitable) potential customers. Indeed, I first agonised about it myself about a year ago – and the debate, as they say, rages. But one aspect of the move towards de-risking that I had not considered is the gender imbalance that it creates.
When the Chinese authorities introduced their “one child only” policy and started enforcing it so strictly that many couples aborted or abandoned female children, they almost certainly didn’t foresee the current result: millions of what are called “reluctant bachelors” who long for a family of their own (OK, they’re probably thinking of nooky first, but then a family) but cannot snag one of the depleted pool of women. And when banks leapt with gusto on the due diligence-saving solution of cutting off entire classes of customer, they probably didn’t predict that it would deal a harsh blow to the cause of equality. In many countries in less developed parts of the world, girls receive less education than boys. This means that more girls are illiterate – or less confident about their literacy – which means that fewer of them apply for identity cards, driving licences and the like. This in turn means that they are less “documented” than men, and so lack the due diligence evidence required by banks. The result is that in South Asia, for instance, 55% of men have a bank account compared to only 37% of women. (Of course, this difference cannot be laid entirely at the doors of the bank: many marriages are still run on traditional lines, with the man having more contact with authority than the home-bound woman.) And in AML terms, this is something of a nonsense.
The whole point of AML is to put in place procedures that are proportionate to the money laundering risk. And women are significantly less criminal than men. (Sorry, chaps, but it’s true.) In 95% of the countries in the world, women comprise less than a tenth of the prison population. The only crimes in which more perpetrators are female than male are prostitution (colour me surprised) and shoplifting. Of course, I could argue that women are just better at not getting caught, but even enhanced female sneakiness could not account for all the difference between the genders, and nor could a reluctance by the courts to put mothers in prison.
Given that women are demonstrably less criminal than men, and given that we are required to operate a risk-based approach to AML, is there an argument for reducing due diligence requirements for female customers in order not to unfairly exclude women from the financial sector? You hear that squawking? That’s a cat among the pigeons, that is.