I was talking to an estate agent. He was negotiating his exit from his current firm to set up on his own.
“All going smoothly?” I asked.
“Well, apart from the Bank.”
I assumed that the Bank was exercising caution over extending a loan to a new business.
“No, they are happy to lend me money, but I don’t need any. They won’t give me a client account. Something to do with money laundering.”
If you want to be a registered letting agent, then you need a client account, so that you can keep money received from tenants, for landlords, separate from your own money, used to run the business. Eminently sensible, one might think. Certainly reassuring for landlords and tenants.
However, the virus that is de-risking is spreading. That anti money-laundering regulation be applied to estate agency seems logical and correct. Now, how a bank is considering that there is more risk with un-segregated funds than with segregated ones is a mystery. Surely there would be more transparency with separated monies?
It seems that we are seeing the trickle-down the de-risking that impacted Money Service Businesses (MSBs) over the last few years. This phenomenon has driven legitimate MSBs underground and out of business. There are legitimate, straight-forward businesses in the UK holding bank account in multiple European countries to protect themselves against sudden, categoric account closure. Madness.
Increasingly, there is acceptance that Banks are defending themselves not against money laundering risk but against regulatory risk. While American prosecutors wielding extra-territorial legislation dish out huge fines and pat each other on the back, the banks are quietly, ruthlessly withdrawing banking services for more and more sectors.
Surely, the world will turn, and these sectors will find ways to persist. Undoubtedly, in so doing, their dealings will be more opaque and quite probably this will be to the detriment of consumers.
Who knew that anti money laundering legislation was going to do that?
Your first defence against derisking is to have robust policies and procedures for anti money laundering. Get in touch for a free consultation. Maybe we can help.