|
|
|
This article from
|
|
|
Getting to know you . . .
|
|
GARY DRINKWATER
President, Jersey Bankers Association
|
The enhanced level of security that exists across the Western world is having an impact on many aspects of our lives and local banking services have not been immune.
The requirement for identification at airport check-ins, the queuing that has intensified when we pass through security checks, the need to be vigilant about items we pack in hand luggage and the greater security at ferry terminals are all visible reminders of the threat posed to our security. Although they create delay we, by and large, accept the fact that the extra precautions are required for our own safety.
These travel security measures are driven by a global drive to crack down on the terrorist threat of course and have become more pronounced since the atrocities of 9/11 and other terrorist incidents around the world that followed afterwards.
Western governments had also turned their attention to the global financial services industry, seeking the co-operation of the financial institutions in the fight against money laundering. Criminals try to establish bank accounts through which money from illegal activity is channelled so that it can subsequently be used as ‘clean’ money without suspicion. The crackdown was aimed at preventing funds being used to support drugs trafficking, terrorism and other criminal activity. Offshore jurisdictions, which in the 1990s did not readily enjoy a positive reputation for their willingness to be open and transparent, were soon on the radar in this crackdown, regardless of the quality of their regulatory regime. Jersey, in fact, was already at the forefront of moves to prevent money laundering and as early as 1999 had implemented the Proceeds of Crime (Jersey) Law, tough new anti-money-laundering measures that were described as ground-breaking legislation at the time. This law requires the industry to detect and report suspicious transactions and thus radically reduces the likelihood that Jersey would be used as a centre for money laundering or serious financial crime. Such measures indicate Jersey’s willingness to co-operate in the international fight against crime. They also help to demonstrate that the Island has a strong, robust regulatory system, valuable for the times when Jersey comes under scrutiny from such organisations as the IMF and the OECD. However, the measures have implications for everyone working in the industry and also for customers of the banks. In banking parlance the precautions are referred to as the Know Your Customer (KYC) rules. Under the legislation, bank staff are required to know the name of the beneficial owner of funds, they are expected to know the source of those funds and they have to be able to verify addresses. If a suspicious transaction is not reported, the bank and the member of staff can be both corporately and personally liable. Most financial centres have implemented similar strict rules and it is important to appreciate that they extend beyond the banking industry. For example, I am aware of a recent case in the UK in which a house vendor was required to provide documentary proof to his lawyer of where he had obtained the cash that he wanted to use as a deposit on a house purchase. The fact that the cash had been given to him as a gift by a relative had to be proved before the lawyer met his obligations under UK rules.
One of the effects of the enhanced regulations has been that from time to time, banks are criticised for the so-called hoops that customers must endure in order that the bank can be satisfied with their identity. There is understandable frustration in some cases when long-established customers, who have perhaps not been in recent contact with their branch, are required to provide written confirmation of who they are and where they live, for instance.
Locally, these incidents are sometimes given high prominence in the Jersey media. The identification requirements imposed on customers are frequently described in reports as being heavy-handed or as examples of over-zealous bureaucracy by the High Street banks.
I acknowledge that staff at banks, on occasions, may not have handled particular incidents well and I am happy to apologise where this has been the case. However, it is important to understand the reasons why extra checks are now required and often this background is not explained in the articles. While the High Street banks must ensure that they apply common sense to the issue, equally they are duty bound to make sure they fulfil their obligations under the regulations. Criminals will go to great lengths to conceal their identities. A law-abiding person’s banking details can be stolen and staff have to be vigilant. Acknowledging, however, the rigidity of the current regulations, particularly when applied to local resident customers, the Jersey Bankers Association and the Jersey Financial Services Commission are in consultation on the matter and it is hoped that a more user-friendly/risk-based approach will be the outcome. If so, this should help to reduce the occasional problems that have arisen between bank staff and customers over the identification issue.
While travel precautions may be a more visible reminder of the security concerns that exist, the High Street banks also have their own set of enhanced customer identification rules to adhere to. These measures, while occasionally frustrating, have the same objective as the checks imposed when we travel, which is the long-term protection of the public.
A leaflet, Getting to Know You, which has been published by the Jersey Bankers Association to explain the background behind the need for additional checks on customer identity, is available from High Street branches.
|
|
|
|
