View more on these topics

Independent view – Peter Hargreaves

I am sure that other brokers, product providers and IFAs will be in the same boat as Hargreaves Lansdown. The amount of time, effort and cost involved in verifying a client’s identity is nothing less than seriously onerous. Let me state here that we take money laundering seriously and adhere strictly to the rules.

We should question this regulation which disadvantages and alienates clients and imposes significant burden on the financial services industry.

Just like the identity cards which this crazy regulationmad government has now voted for – aided and abetted by the ineffective opposition – customer identification requirements are complex, burdensome and disproportionate. I would like to see a list of people that the current procedures have caught. Surely, it could only be people so stupid that they would have been caught anyway.

If drug barons can manage to get billions of pounds worth of drugs into any country at will, I would have thought it was within their capabilities to obtain a few forged passports.

Recently, some villains walked into two branches of my bank with forged passports and forged utility bills to withdraw money from my account. There was a third attempt with a further forged passport. Indeed, you only have to go onto the internet to find people who provide this service for you.

I cannot believe that our anti-money laundering regulations stop the corrupt despots from various totalitarian re-gions of the world salting away billions of pounds of their countries’ monies, while their populations die in poverty.

We should count the cost of our anti-money laundering procedures in the UK, the cost of its regulation and policing. By not acquiescing to Brussels, the money saved could be used to relieve some of the agony caused by the crooks who run third-world banana republics.

Before I commenced writing this article, I just asked our accounts department to carry out an approximation of how much we spend on complying with anti-money laundering regulation and the costs directly attributable are 250,000 a year. That’s not counting the huge aggravation and bad will that it creates with our clients.

Let’s face it, anti-money laundering regulation came from Brussels to stop German tax evaders from salting their money away in Luxembourg, although how that stopped them from stuffing a suitcase full of Euros, hiding it in the back of a Mercedes and driving over the border into Switzerland still puzzles me.

The government here are probably keen on money laundering because after the next tax hike we won’t be going on booze cruises to France. Substantial portions of the country disenamoured by higher tax rates will be on the Swiss run and it won’t be for skiing.

I was astounded 12 months ago when the Bank of Scotland, after noting slight problems in their anti-money laundering procedures, reprocessed all their money laundering transactions. Despite finding nothing wrong, it still managed to receive a seven figure fine. I don’t know the ins and outs of the case but it does look a trifle harsh.

I am aware that the FSA and various other stakeholders are working at defusing the customer identification issue by the end of 2005, it is essential that any new requirements take into consideration the cost and value for money, the customer experience and the benefit of the information to law enforcement.

The sad thing is that the country is also now going to be subjected to an even greater cost than money laundering, probably with similar very limited effect.

The question I ask myself is completely irrelevant to our industry but relevant to every citizen of this land – which 10,000 civil servants will get the sack if identity cards come in at over 6bn and which 100,000 civil servants will get the sack if, as is normally the case with any government IT initiative, the cost escalates significantly further and doesn’t work?We also have never had an estimate of how much a year it will cost to run. Of course, if these identity cards cause us to dispense with money laundering, then we might see a small advantage – the smart money is betting they will make money laundering procedures more complicated.

Recommended

Standard board failed pension test

Standard Life claims that its need to demutualise is the result of its management having responded too slowly to the demands of new solvency regulations. That may be part of the reason but I do not believe it to be the most significant part. The main reason is that it has tried and failed disastrously […]

Julian Gibbs

I do not often write about conservative funds but, in markets like these, that is what the average middleaged Isa investor wants.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment