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.
I hate money laundering 
I think you are right, too few females with bank accounts and too few in positions of responsibility. And it would be a shame if regulation perpetuates that.
This is a hard one. I am all for more equality, giving more opportunities to women. But won’t male criminals take advantage of the reduced diligence requirements for women? Perhaps this reduced diligence should be combined with a closer at suspicious bank movements. Or a limited bank account (limited in transactions, amount of money,…) These women will most likely live in precarious conditions. Someone offering them money for something they don’t really understand might be attractive. Or they will love and trust the person and are eager to help out. There should also be a closer look at why they need a bank account. If they are illiterate, they will not understand how to use a bank account. They will not understand the consequences of eg taking out a micro credit and not being able to repay it. Just look at the micro finance crisis in India. Bankers will present products to these illiterate clients. That is a fact that no one can deny. We are all victims of the banks’ greed. But we still survive. Will they? Give women an education before you give them a bank account.
I have to agree with Claire above, if you build any lower threshold of CDD or similar into the regime the real winners will be money launders who will exploit it. Women would be at danger of exploitation by criminal groups, smurfing will get that much easier. I personally think a bit more sense by the regulating banks under the current threshold might be a more sensible idea. Thumb prints and other biometric data actually have a very long history of being used as identification for semi-literate in many parts of the world
As a aside there is a lot of time in crime science and criminology dedicated to examining women and the claim they are “less criminal” *. I remain a bit skeptical of the that statement, I think it has as much to do with gender stereotyping then innate capability or morality. But I do wonder if in the future with the rise of very profitable non-violent crime we might see more female participation at top levels? Given how many talented women find there lawful opportunities restricted by sexism, will they rather than accepting the status quo go into computer crime or other criminality?
* For a start we tend not measure criminality directly, but conviction rate which is not the same thing. I am not maintaining that women are innately better at beating the system, but there is a fair body of research that shows institutional misogyny and sexism influence the investigation and charging rate of female suspects, sometimes overlooking females completely. Least it sounds like this is too women’s benefit there is corresponding evidence that when a women is convicted of a crime they receive a much longer sentence than a man would for similar offences.
Thanks to Claire and Robert for such thoughtful comments – it is only by contemplating and discussing the thornier issues of money laundering (and wider criminality) that we can work towards having the most effective and the fairest AML regime.
Best wishes from Susan