Sweep away this bureaucratic racket
Money-laundering rules are absurd and restrict competition. It’s time for some common sense
Weall know the drill. Every time you need to open a new bank account, or hire a solicitor, or change your insurance policy, you run into a wall of money-laundering checks. You have to find a couple of utility bills, less than three months old of course, even though no one gets them in the post any more, and if they ask for them to be sent, the postal workers are on strike anyway. You might well need a certified copy of your passport as well. And perhaps of your driving licence. You might well have to record a video of yourself and send that across as well. It has turned into a nightmare. A simple transaction that should take a few minutes, and a couple of swipes on your phone, turns into days of hassle. Not very surprisingly many of us just give up and decide it is not worth the bother.
It is about to get worse. The Economic Crime and Corporate Transparency Bill will add another whole layer of checks and regulations that we will all have to comply with. Every time there is any kind of financial scandal there are demands for more and more money-laundering controls. It is easy for governments to agree to that. It doesn’t cost them anything and it makes ministers look tough. At the current rate we soon won’t be able to hop into an Uber or buy a drink at a bar without showing our passports and a couple of utility bills.
A SIMPLE QUESTION
Surely we should stop to ask a very simple question. Does any of it actually achieve anything? The case of Yevgeny Prigozhin might tell us something important. Prigozhin is probably about as dodgy a character as it is possible to imagine right now. The head of Russia’s brutal Wagner Group, a private military corporation, he is one of Vladimir Putin’s key allies, and responsible for some of the worst crimes committed during the invasion of Ukraine. And yet according to a report in the Financial Times he was able to pass the UK’s money-laundering checks by simply offering a gas bill in the name of his 81-year-old mother. He was even sanctioned by the British and American governments at the time. None of that mattered. He ticked a few boxes and so it was all fine.
It is not the first time something like this has happened. In 2021 NatWest received a hefty fine for failing to detect money laundering in a case where it accepted £700,000 in cash brought into a branch in black bin liners. But, hey, it was fine as they had a recent council-tax bill. And yet we never seem to hear of any criminals or terrorists actually getting caught. No one ever calls the police because a utility bill wasn’t presented, nor does it ever seem to lead to any arrests. In truth, there is no evidence that any of the money-laundering checks ever catch any real criminals.
ARE YOU A RUSSIAN WARLORD?
No one wants to go back to the days when you could simply walk into a bank with a suitcase full of cash and open an anonymous account, no questions asked. But our ineffective and meaningless money-laundering rules have become a vast bureaucratic racket. And it is one that imposes huge costs on the economy. The rules restrict competition by making it harder for us to switch from one company to another, and for start-ups to break in to the market. Indeed, one of the main reasons the banking market remains dominated by the big four clearing banks, despite plenty of web-based start-ups with far better service, is that money-laundering rules make it too much hassle for many of us to switch accounts. The same is true of other financial services. The rules are meant to protect us, but what they really do is allow inefficient monopolies to lumber on despite high prices and poor customer service.
Here’s a simple suggestion. We should sweep them all away. Beyond simple ID, no one should have to answer any questions to open a bank account or buy a house. Instead, we should just let companies apply a little common sense – such as asking if someone happens to be a Russian warlord before taking them on as a client. That would be cheaper, less bother for the rest of us, and more effective as well.
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