Last weekend we were at a local garden centre – they do lovely cakes – and outside the café they had set up a mock garden. In it was a children’s slide, with a sign propped up on its steps: “Due to Health and Safety, children must not use this slide!” I’ve reproduced it exactly, and I had a happy and pedantic five minutes pointing out all the errors – due rather than owing, random capitalisation, excess exclamation mark and so on. (We also wondered how using a slide could be detrimental to the health – too thrilling, perhaps?) But it was yet another example of the lazy use of regulation and legislation to prevent behaviour that the institution itself simply does not want: I doubt that there is any health and safety regulation that mandates against the use of slides in garden centres, but this place simply (and entirely reasonably) didn’t want its stock damaged before purchase. So why not just say so?
What has this to do with money laundering, I hear you ask. (Yes: I do hear everything that contains the words “money laundering”.) Well, like the elfins (for non-UK readers, that’s those working in health and safety), we AML-ers often find our cause being cited by businesses that are making decisions or taking actions that they fear will be unpopular. And last week they (or banks, at least) were called on this by no less an Authority than the Financial Conduct one.
On 24 May 2016, the FCA published a report it had commissioned on “Drivers and Impacts of Derisking”, which found that (according to the FCA’s press release) “some banks are closing accounts for money transmission services, pawnbrokers, fintech companies, and charities operating in geographical areas perceived to present greater ML/TF risks”. No surprise here. But (continues the press release) in deciding on a course of action, “banks appear to weigh up a variety of benefits and costs of maintaining an account that are not always related to the financial crime risks the customer might pose [which] include specific customer considerations such as the assessment of the credit risk presented by the potential customer and the prospective profitability of a relationship.” But what reason is given to the out-booted customer? You’ve guessed it: AML. And the FCA’s position on this is clear: “Banks should not use AML as an excuse for closing accounts when they are closing them for other reasons.” In other words, don’t blame the elfins if you don’t want kids on your slide.