At least once a month someone, on hearing my line of work, will have a go at me about how “money laundering” has got in the way of their opening a bank account, getting a loan, buying a house or some other financial activity without “having to give them loads of information”. I just smile and nod and trot out the usual explanation that the law is actually quite reasonable but sometimes financial institutions blame it when they are collecting information for other purposes (to safeguard their investment, for instance, or to sell you more stuff). But sometimes the AML legislation does have unintended consequences. When the sale of marijuana for recreational purposes was legalised in several American states in 2014, for example, the businesses that set up to sell the stuff quickly found that they could not get bank accounts. If a bank accepts money from the sale of an illegal substance it is laundering that money, and most banks did not have their head offices in the states where the sale of pot was now legal. I am told that the cities where pot sales are highest (boom boom) – such as Denver – are now criss-crossed by armoured vans full of cash, collecting from licensed shops and paying authorised suppliers, as none of them can use the banking system.
And it appears that a similar situation is developing in western Europe, where AML requirements are making it difficult for a certain class of legal customer to get access to financial services – this time, it’s asylum seekers. The situation is particularly acute in Sweden, now home to one of the highest number of migrants fleeing conflicts in Syria, Afghanistan and elsewhere in the Middle East. In 2015, 163,000 migrants headed to Sweden, attracted by its generous asylum laws and well-functioning welfare system. But so far, according to Swedish Financial Markets Minister Per Bolund in an interview in April 2016, fewer than 500 of them have so far found a job. And the main reason? If a bank cannot verify an applicant’s identity, it will not open an account for him. Asylum seekers – in legal limbo as they are – often lack the standard identity documents that a bank would want. And without a bank account, it is not easy to receive a salary in a sophisticated western country. The irony is even greater as in Sweden there are jobs aplenty for the asylum seekers: the country is currently experiencing an economic boom, and the government has said that 700,000 new homes need to be built by 2025 to address a housing shortage created by population growth – which means that about 10,000 workers will need to be recruited each year in the construction industry alone.
Step forward the European Banking Authority, which on 12 April 2016 issued an Opinion on the application of CDD measures to asylum seekers, stating that asylum seekers’ access to financial products and services is “important and necessary”. A well-written and helpful document, it offers a solution to ensure that asylum seekers can gain access to essential financial services: “In most cases, money laundering and terrorist financing risks – including those associated with weaker forms of customer identification – can be managed effectively by offering a more limited range of services or setting up stricter internal controls, which will facilitate early intervention in the event of suspicion.” Perhaps we should get the EBA to say something about de-risking: they sound a sensible, practical and compassionate bunch.