There is a deal of hooha going on at the moment about the ‘persecution’ of Nigel Farage by the banking industry. I append below an interesting and informative email, dated 26 June 2023, from “Open Britain” explaining the situation. Our Nige does not emerge (surprise ! surprise !) smelling of roses . . .
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Open Britain
Dear Ian,
Nigel Farage is all over Twitter today, claiming that he may be forced to leave the UK because his bank of 30+ years has decided it doesn’t want his business anymore, and no other bank will take him on.
He says it’s pure persecution…the Remainer Elite taking revenge for his role in delivering Brexit. But there’s a bit more to it than that. Needless to say, Farage is being more than a little economical with the actualité.
He DOES admit to being a Politically Exposed Person (PEP), as defined by the Financial Action Task Force, an international body set up in 1989 to set international standards for countering money laundering and terrorist financing.
He should not be surprised, then, that as a result, his bank is obliged by UK law – the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 – to carry out robust due diligence on him and his banking activities.
From what Farage has said, it appears that the bank has done this due diligence and concluded that, for some reason or other, he represents a level of risk they cannot tolerate.
So, why might that be?
Well, the main reasons a bank might close a PEP’s accounts are:
Suspicion of Money Laundering or Other Illegal Activity: This is the most common reason for closing a PEP's account. This can result from unusual transactions, particularly those involving large sums of money or transactions that do not match the account holder's typical behaviour.
Failure to Comply with KYC/AML Regulations: All banks are required by the Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations to carry out strict checks on their customers. If a PEP fails to provide the necessary documentation or information, or if the information provided raises concerns, the bank may choose to close the account.
Reputational Risk: By their very definition, PEPs are under public scrutiny, and any scandal associated with them can potentially harm the reputation of the bank. If a PEP becomes involved in a public scandal, especially one involving financial wrongdoing, a bank may decide to close an account to protect its own reputation. (Perish the thought that Farage would ever be involved in a public scandal!)
Regulatory Pressure: Sometimes, banks face pressure from regulators to sever ties with certain PEPs, particularly in scenarios involving international sanctions, corruption charges, or other high-profile legal issues. Bad as he is, Farage probably doesn’t quite fall into this category. Yet.
Business Risk: Banks also need to consider the business risk of maintaining the account. If the costs and risks associated with maintaining and monitoring the account outweigh the potential benefits (e.g., due to high compliance costs or the risk of fines for non-compliance), the bank may decide to close the account.Given the limited amount of actual information in Farage’s theatrical outburst, it’s impossible to know which, if any, of these was behind his bank’s decision. But none of them seems like particularly good news for him, so we will watch with great interest as things unfold…especially if it looks like he might feel the need to emigrate as a result of it. (Will he take a small boat to France, I wonder?)
All the best,
Mark Kieran
CEO, Open Britain
