UK watchdog welcomes banks’ decision to confirm customer identity

The six banks are Abbey National, Barclays, HBOS, HSBC, Lloyds-TSB and the Royal Bank of Scotland Group. The six issued a joint statement of principles for fighting the financing of crime and terrorism, an initiative that should reduce their risks to money laundering claims.

UK Financial Services Authority (FSA) managing director Carol Sergeant said the banks’ move was designed to deal with their portfolio of existing customers, who have never been subject to anti-money laundering checks. This was because they either became customers before anti-money laundering legal requirements were introduced in 1994, or they became customers when the checks were not as effective as they are today.

The FSA fully supported the banks’ risk-based approach, which is “absolutely in line with our whole approach to regulation”, Sergeant told a London conference on money laundering organised by the FSA, the UK’s principal financial market watchdog.

The banks will use profiling techniques, filters and other risk-based techniques to focus on the potentially high and medium risks in their customer portfolios.

“I hope those customers who are contacted by their banks will recognise the public interest in co-operating with any necessary checks,” Sergeant said.

In their statement, the banks said they believed that by sharing and promoting best practice in their anti-money laundering efforts, they could achieve more than the sum of their individual activities.