Banks are complaining they have become stuck between a rock and a hard place thanks to Government policy according to the Financial Times.
The report says the banks see themselves caught between the Treasury's desire to lower barriers deterring people from opening bank accounts and the Home Office stringent defences against money laundering.
The Treasury policy action team is expected to call for a substantial reduction in the number of people refused bank accounts when it reports in a couple of weeks.
The team is said to be irritated by evidence that people are turned away from banks because they do not have the satisfactory identification required to discourage money launderers.
The British Bankers' Association says its staff face prison if they did not take adequate precautions against laundering but claim there is no clear guidance on what constitutes proper identification.